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February 29, 2012

Nokia just announced its 808 PureView. Lets look at what Nokia can do, if the CEO steps aside and stops meddling in matters he clearly does not understand. So a quick overview? The biggest camera sensor ever seen in a phone - 41 megapixels! Not 4.1 megapixels, yes, 41 megapixels. If you thought the HTC Titan 2 was a huge camera sensor at 16 mp, this 808 PureView maxes that not by the usual 20% to 33% better (the usual jump in camera resolutions by generation) or not 50% better, not even 100% more, but truly 2.5x bigger sensor. MASSIVE jump. So big, it will take years for rivals to match this.

And the rest of the specs. Total top-of-the-line across the board. 4 inch capacitive touch screen, WiFi, Bluetooth 3, second camera, FM radio, FM transmitter, TV out, HDMI out, NFC, and obviously all specs that are normal now for top phones from WiFi to GPS. The specs are on par or better than most top phones on the market and by most specs will leave for example the iPhone 4S in the dust. And thats before we look at the piece de resistance, the camera...

Xenon flash (that is 'real' flash for the non-camera geeks). Full HD video recording resolution (??? Yes!) ie - get this - 1920x1080 !!!! and that is at 30 fps. Carl Zeiss optics (of course). Focal length of 35mm equivalent, F stop 2.4. Autofocus and manual focus. And macro mode to 15cm close-ups. ..and the 808 PureView has tripod support as well. This is instantly the cameraphone every single professional journalist and photographer and media person craves.

PLATFORMS BURNING?

And what is this superduper smartphone then running on? That 'our future smartphones will all work on Windows Phone' operating system from Microsoft? No. Oh, then it must be that 'other' new OS that Nokia developed with Intel last year, called MeeGo, for which it produced two superphones already, the N9 and the N950. This must be the third MeeGo phone. No.

This 808 PureView runs on the 'burning platforms' obsolete Symbian. Yes. The specs are so incredible, Windows Phone cannot be used to run this phone. Only Symbian supports all these features on this phone. Now who was that lunatic CEO who said last year in February that Symbian was so totally dead as an OS, that Nokia staff had to jump off the oil rig to near-certain death? Ah, yes. That Symbian. And its newest edition, called Symbian Belle.

ALL NEW PHONES LOOK GOOD WHEN REVEALED

Is it the ultimate phone? We don't know yet, because you never know when a phone is announced, if it then has unforseen problems or design flaws. But on paper, this is a hot smartphone. Is it the best phone of the year? Maybe, maybe not. Is it the best cameraphone. For sure. This 808 PureView did not just move the goal-posts of the cameraphone game, it invented a whole new game where it is the only player. This is what Nokia can do, when the meddling CEO steps aside, and just lets Nokia be Nokia. This is the level of market brilliance and excellence, that we used to expect from Nokia back in the years of Ollila's leadership (before his successor CEO, Kallasvuo the accountant, came in and made moronic decisions to cut corners and savings at the cost of the brand and leadership).

Is it ugly. Yeah, I'll grant you its not pretty. If you want a pretty phone, buy an iPhone. But this is such a monster leap in the camera side of mobile phones, that even if it is severely delayed like the N8 was, for example, it will still set a whole new standard to cameraphones when it ships. And one thing Elop has been doing at Nokia, clearly, is getting Nokia to deliver promised phones more on time, so we might see the 808 PureView selling this summer - just in time to run against the iPhone 5, which will look quite modest (in its specs) when compared to this monster. I mean, the 'big' step for Apple that people hope for is NFC, something Nokia has had in its previous flagship already in the N9 last year.

BUT CAMERAS DO NOT MATTER

Do cameras matter. Haha, funny you'd ask. The camera ranks among the top criteria in buying smartphones - ahead of the OS or the apps in fact. When I did my simplified smartphone segmentation model here on this blog two years ago, I found that 6% of consumer smartphones are purchased based on a premium camera ability as the most important criterion (for those of us who really love our cameraphones or video recording phones). And I stressed back then, that this segment was owned by the top cameraphones of the Nokia N-Series. How big is this segment overall this year? About 39 million premium cameraphones. The 808 PureView will not win all of that, as its price will be a barrier, but it will be the aspirational phone for those 39 million customers, for literally every one of them. They will all test an 808 PureView in a store and will do their darndest to try to justify buying it, regardless of what is the price. If Nokia is smart, they will rush an 707 PureView onto the market well before Christmas, as a lower cost little-brother and Nokia may well return to be the cameraphone master as it was up to the N8 a year ago and take most of this market segment.

WHAT TOMI WOULD DO

But lets be clear. I argued time and again on this blog and elsewhere, that the madness for giant handset maker Nokia was to abandon its competitive edges, and try to do a perfect copy of the iPhone. That was as mad as Ford abandoning its vast range of cars, and only do supercars to compete with Ferrari. A year ago on this blog, after I had been quite critical of Nokia the past few years of cutting corners and pursuing its 'iPhone envy' strategy, I was asked by my readers, what would I do. This was soon after Elop had taken over - and I was early on very supportive of Elop's early steps - I did write a long blog about how to fix Nokia. I have explained very clearly on this blog that the problem was not the operating system - that Nokia had a strong strategy for its OS migration - which was of course moving away from Symbian to the MeeGo OS - and that moving to some other OS like Windows Phone would be suicidal. I was very clear that Nokia's true problems were those of execution and of marketing. Of very basic business issues such as providing products that customers want and love. Like Nokia was early in the 1990s but lost its way under Kallasvuo's crazy cost-cutting days towards the end of the decade.

In that blog I made it very clear, that one of the competitive advantages that Nokia had always held, a true Nokia strong-hold was the cameraphone segment of premium smartphones, most epitomized by the N93, the smartphone that redefined what a cameraphone could be, and for years being the standard-setter for supremacy in cameraphones (US consumers never got to buy the N93, like they missed out on most of Nokia's true flagship phones). I was very clear, a year ago just before the notorious Burning Platforms memo, that what Nokia needed was a flagship smartphone that was an anti-iPhone, something completely different, and one of Nokia's such superphone legacies was the cameraphone side. And I urged Nokia to produce the best cameraphone ever made, with Xenon flash etc etc etc. This 808 PureView is EXACTLY what I begged Nokia to do a year ago. It is a shame it took idiot CEO Elop a year of trying every other stupid path of futility, before he finally did stumble upon this path. So do I agree with this phone, its form factor, its target market, its specs? You betcha! This is EXACTLY what Nokia need.....ed last year.

And better yet. I have been very critical on this blog about recent Nokia top phones, which have been abandoning various Nokia staples and strongholds and competitive advantages. It started with Kallasvuo's time and was made far worse under Elop. So look at the Lumia 800 and what 'faults' I have catalogued with Nokia's supposed flagship for Christmas 2011? On a vast array of abilities and specs, Nokia has moved backwards from what it once offered - every one of those backward steps will produce disappointment in loyal returning Nokia consumers. And please remember, some of these problems were introduced already before but are also on the Lumia 800. Problems like what? No removable battery! (Nokia phones often sold in countries where electricity supply is not regular and steady; plus premium phones used by busy execs who may run long days and travel and need extra batteries, not to mention Nokia phones being the brand most sold in second hand market - where a fresh battery is needed). No more microSD memory slot! No forward-facing second camera! No Xenon flash, only LED flash. The camera resolution was literally a step back where previous flagship had 12 mp, with the Lumia 800 it was down to 8 mp. No more NFC. No TV-out. No HDMI out. The stupid fixed-focus lens that does not do close-ups. No FM radio transmitter, etc etc etc

This 808 PureView fixes ALL of those issues I have cried about on this blog. Yes, it finally restores the user-removable battery. Yes, the microSD is back! The Xenon flash is back. The flagship has the biggest camera sensor Nokia has ever produced (and wow what a leap). TV out is back. HDMI out is back. FM transmitter is back. The camera - ah, thank you Nokia for seeing the reason - is back to having autofocus and macro mode. We need to scan our receipts and documents and all sorts of little slips of paper etc that we now store on our phones. Thank you! Yes, this one smartphone fixes essentially every problem I have complained about on this blog, about why Nokia has lost its way and is pissing off its customers. The only minor qualm I would have is that the screen resolution does not do justice to this phone.

If this 808 PureView is the sign of what all future Nokia smartphones will be like, it is good news indeed. And if I had been in charge of Nokia's design, this is just about exactly what I would have wanted Nokia engineers to produce. This is as near perfection to my mind as I can imagine - and bearing in mind, I am an ex Camera buff who once was a serious amateur photo-journalist with countless printed photographs including newspaper cover shots etc. So I am obviously in that camera-geek category segment for whom this 808 PureView is targeted.

But for those who thought Nokia's best offer was the Lumia 900 was somehow the best Nokia could do these days, clearly not. The Lumia 900 is a sorry excuse for a flagship phone. This 808 PureView is far closer to what Nokia can do. And think about this. Last year Elop torpedoed and sunk any resources in and around Symbian, and Nokia's past path, and Nokia's exceptional and unique competitive advantages. He attempted to mold Nokia into the form of Apple, copying the iPhone with the lame Windows Phone OS. This 808 PureView is the absolute opposite of that. This is clearly the 'anti-iPhone' - a smartphone that excels in superb technology, while not attempting to be the coolest-looking show-off fashion phone.

If Elop had not caused unprecedented chaos at Nokia last year, and instead had let Nokia be Nokia, we would have had something like this 808 PureView for Christmas 2011 sales, maybe not 41mp but looking what Nokia managed in 2010 with the N8, surely we'd have had something like 16 or 20 megapixels - and Xenon flash etc etc etc - for Q4 (running Symbian obviously) and Nokia would have had a big Christmas sales quarter and all tech magazines would have featured the top-of-the-line Nokia on their covers. This 808 PureView yes, on Symbian, could have been a hit phone in the USA even. If Elop is able to land deals for the truly pedestrian Lumia 710 and the (boring) Lumia 900 at US carriers, imagine the excitement they could have had with this 808 PureView.

First, what is the TomiAhonen Almanac 2012? Its an annual statistical review of the total mobile industry, from handsets to services, covering all from voice calls and SMS text messages to smartphone apps and mobile advertising to content types from music to gaming to social networking on mobile. It counts the subscribers, the traffic and the revenues globally and across eight regions of the planet. All the data is updated to January 1 of the year of the Almanac, ie now for January 1, 2012.

I had been giving statistical reviews of the industry in my presentations and on this blog for a long time. And often people would come back to me and ask for more and more. As this is the fastest-growing giant industry of all time (the mobile industry was commercially launched only 33 years ago, in 1979, and crossed the 1 Trillion dollar level in an amazing 29 years - a level never reached by most 'glamorous' tech and media industries like the computer industry, the internet, television, movies, radio, etc). Mobile has produced the richest person on the planet - Carlos Slim of America Movil - and the most valuable company of the world, Apple, which only became so after it ended calling itself Apple Computer, and now calls itself a 'mobile' company. Google the fastest-growing company ever from zero to Fortune 500 size, also says the future of the internet is mobile. But as this industry is so alluring, it is also remarkably complex. The numbers are diffult to find, and often contradictory. That is why I released my Almanac.

For example, in the mobile internet chapter I have 8 separate tables and charts to illustrate the various ways to measure 'mobile data' or 'mobile web' etc. One of the most popular charts from the Almanac is this Venn diagram which puts the legacy traditional PC based internet and the newer mobile phone based internet into context.

(you can click on the chart to see larger version of it)

From this table you can also easily see why its perfectly valid for one expert to say there are only 800 million people who use the mobile internet, and that number to be smaller than those who access the internet on a PC at 1.4 Billion (that view is valid) or for another expert to say that 1.8 Billion people access the internet on a mobile phone and those who only use a PC is down to 350 million (equally valid view). Part of the problem is that mid-ground in the Venn diagram, that 1.05 Billion people use both PC and mobile phones to access the internet, so how their use is attributed, will cause plenty of confusion. Thats just one of the 96 charts and tables in the TomiAhonen Almanac 2012

I also have perhaps the only table anywhere that puts all of the different measures next to each other, so you can see at one glance, what is the difference if you measure those who have a 'data plan' to access the internet (whether they use it or not), or if the users actually 'surf' internet content, or if they use 'the real internet' etc. Actually ten different measures of mobile data users, all valid, but based on different definitions, you get different results. In that chapter I go through each of the ten valid defintions, and count the results based on the definition - and then explain what other 'data' is out there that is not valid to answer the question.

I also wanted to keep it simple and accessable. Most of the people curious about mobile are not in the market to buy a 1,000 dollar industrial report about the mobile industry from one of the big analyst houses. It is total overkill and most don't have that kind of budgets. So I decided to keep this accessable and truly cheap, so the price is simply 9.99 Euros, something anyone can afford. The format is ebook, so you can download it immediately and have it stored on your laptop or iPad or smartphone. The pdf file is not crippled (your license is a single user license but you may make personal copies to your different devices) and best of all, the pages are formated for the small screen, so you really can have all the big numbers and stats in your pocket, accessable every day everywhere.

I then thought about what are the most important numbers and stats. The Almanac has evolved over the years but now runs 191 pages, has 96 tables and charts, and again added more information (three totally new charts added, one no longer relevant chart removed). Compared to the previous 2011 edition, all chapters have been revised and updated, and all existing charts and tables of course updated by a year. So this is the table of contents for 2012:

Thats a lot of data packed in 191 pages. For anyone new to mobile the TomiAhonen Almanac 2012 is the perfect place to start, before you then perhaps buy a specialized report in the industry you are in, whether smartphone apps or newsmedia or mobile payments etc. And I really intended it to be a resource for those who work in the industry, to have the critical data in your pocket. I literally use the Almanac several times every week to check up on specific data points myself. I cannot imagine my work without it and I wrote it haha.. It is that good. But don't take my word for it, this is what Russell Buckley ex-Google ex-Admob wrote about the Almanac: "Whenever I need a stat, Tomi seems to have it, so I'd highly recommend this Almanac for any aspiring mobile fact junkie."

Now, enough of the brochure, eh? I want to share some insights with you from the 2012 edition of the Almanac. Lets take some tidbits:

The Almanac offers regularly splits of the big data into more practical divisions. Sometimes it makes sense to see the data split by regions, I use 8 regions in the Almanac, so we have data by North America and Latin America, West Europe, East Europe, Advanced parts of Asia-Pacific and Emerging World parts of Asia, plus Africa, and the Middle East. These 8 regions tend to often have significant variances in matters from mobile subscriber penetration rates to smartphone adoption rates to various media consumption. And if Asia is grouped as one, it hides the advanced parts of Asia, which often leads Europe (and North America), in the giant numbers of China and India. So lets take one table here to illustrate:

(you can click on the chart to see larger version of it)

This is the table of the global mobile gaming revenues worldwide which reached $17.2 Billion dollars in 2011. (Remember this includes all revenues not just those billed through the operators/carriers, and thus obviously it has the gaming revenues now forming the majority of the smartphone apps ecosystem driven by Angry Birds. But as you can see, the biggest market in mobile gaming is the Advanced Asia-Pacific market led by obviously the gaming-mad nations of Japan and South Korea. China helps drive the Asia-Developing region to second place, with North America third, well ahead of the West Europeans in gaming revenues.

That is the kind of info the TomiAhonen Almanac 2012 has for several categories of its information. There are for example 9 seperate charts like the above, that split particular data across those 8 regions. Another vital point is the handset population. I have a full handset chapter covering smartphones and dumbphones. There I have 14 tables about the handset side of the industry including cameraphone resolutions and the input methods (touch screens and QWERTY keypads) etc. There also is a big table of handset installed base features, with information like this short excerpt:

And so forth. There are 14 separate data items in that table alone (the above had 7). And the table has not only the data for the 14 items for the year 2011, but also the year before, 2010 and the growth rate for each item, so if you are making plans to launch your service and for example you might consider whether to do it on bluetooth or WiFi or 3G or via memory card, you can also see the growth rate and thus make your own projection of what the installed base might be at the end of this year.

But then for many service areas, that data is not the deciding factor, it is the particular needs of that business, and the installed base of handsets. So I have also where relevant, the chart describing the installed base of handsets globally, by the required needs of the type of business. Lets look at music for example:

(you can click on the chart to see larger version of it)

The needs of the handset installed base, for gaming, is quite diffrerent than that for music, or for television/video content etc. The above chart for example shows that if you want to sell ringing tones, today you can reach essentially all phones. But if you want to sell full-track MP3 music tracks, only about 3 out of every 4 phones has a media player, for which you can sell such music. And then that there is coming now the ever-more-common FM radio receiver, which may interfere with the music market. I have such 8 such charts in the Tomi Ahonen Almanac 2012 covering more than a dozen separate phone feature sets as relevant to that particular industry segment.

The Almanac has relevant distributions of information also by age, usage over time, market shares, etc. There are very valuable revenue data including for several categories, average revenue per subscriber (all connected including non-users) and average revenue per active user. There are of course pie graphs splitting particular areas into their sub-parts (like types of music, or types of advertising etc). But lets take one more chart to show the versatility of the TomiAhonen Almanac 2012. I am very proud of sharing information about the Digital Divide, to highlight the issues and also to celebrate that mobile is leading in helping bridge that divide. Here is the first chart of the chapter on the Digital Divide:

(you can click on the chart to see larger version of it)

The whole chapter examines the difference of the 'West' or the Industrialized World, and the Emerging World. The handsets, the subscribers, the revenues etc are all covered across this divide, information that is invaluable not only for 'Western' companies hoping to find markets (around mobile) in the Emerging World, but perhaps even more relevantly, for new companies growing rapidly in the Emerging World, who now are considering expaning abroad, and would like to see how different the rest of the world is (or is not).

The TomiAhonen Almanac 2012 includes several of my proprietary data that I am famous for, from the analysis of multiple subscribers separated from unique mobile phone owners, second handsets, shared phones, data cards, etc, to some big indexes I publish such as the index showing global leadership in mobile, and the big companies of the mobile industry etc. Then in the back of the Almanac are vital resources, including the very popular and widely referenced 'short history' chapter of major milestones. Did you know that mobile money was launched 14 years ago in Finland.. by Coca Cola (creating the world's first SMS-enabled Coke vending machines) or that 2002 was the year - yes 10 years ago - when the world's mobile phone accounts had passed the total fixed landline telephone connections in use.

And then there are the big tables at the back, 12 pages of more numbers and numbers and numbers. Of those perhaps the most useful is the chart of the 60 relevant countries (all countries where the population is more than 50 million, or where the mobile industry itself earns more than 1 Billion dollars, ie among the smaller European and Asian countries, any that have more than 4 million people typically). So Luxembourg and Monaco and Lichenstein are not 'cluttering' the data in this pocketable volume, but if you want Poland or Peru or the Philippines or Portugal, you will find the data here. And that chart has data you will be hard-pressed to find anywhere. In addition to the population size to put the country in context (not all are geography fanatics), there are data points for total mobile subscriptions and the national penetration rate fo course, but also the data for unique mobile users ! and info on whether the country has launched 3G, if the market offers MVNOs, and what standards of cellular technology are deployed (is there CDMA technology deployed in that country or only GSM).

So that is the TomiAhonen Almanac 2012 edition. As Ricky Cadden 'The Symbian Guru' said of the Almanac, "Speaking of statistics, Tomi Ahonen has put together the Tomi Ahonen Almanac as an eBook for mobile nuts. In it, you can quickly find out the mobile penetration of say, Thailand, or that 51% of the Earth's population has at least one cellphone." Or how WAP Review wrote about the Almanac: "If you're interested in mobile statistics, you really need to pick up a copy of Tomi Ahonen's Almanac. The Almanac is full of hard to find information."

The whole package costs a mere 9.99 Euros and you can have it in your pocket today, loaded on your smartphone, and a copy on your iPad and another copy of the ebook on your laptop. I do literally use my own Almanac regularly in my work and obviously quote stats from it in my work regularly. If you would like to see more, please go to the Almanac info andordering page - which is the only place where you can buy or downlaod the Almanac (it is not sold on Amazon or Kindle or anywhere else except at this one page). See more at TomiAhonen Almanac 2012.

All data in this blog posting may be freely quoted and used, including the images of the charts as on this blog as long as you do not alter the charts. If you do quote stats from this blog, please include a link to this page and please list your source as TomiAhonen Almanac 2012.

February 27, 2012

The big statistics and numbers blog! Its that time of year, the start of a new year, and we have to update and memorize new numbers. For me this annual blog is a kind of honor, a bit like the US president who gives his 'State of the Union' speech to Congress. (The state of our industry is strong!) And the blog article will get very wide coverage throughout the year as the definitive collection of the big numbers in one place.

So lets do a bit of the headline stuff. Two years ago we learned that the richest person on the planet was no longer from the PC industry, Mr Bill Gates of Microsoft in the USA, but that title had been taken over by Mr Carlos Slim, the mobile telecoms tycoon from Mexico whose America Movil network stretches across 240 million people and most of Latin America. Cool. This industry produced the richest person on the planet.

Three years ago I reported that mobile had passed the Trillion dollar level in annual revenues and in so doing, had become in fact the fastest new industry to reach that lofty level - television and radio never became that big, the PC industry and the internet even combined, are not that big today. Print media - all books, magazines and newspapers printed annually - never reached that level. Mobile is not just one of a handful Trillion-dollar size giant global industries like the automobile business or food or construction or banking or military spending; but mobile has set the record for the fastest growth from zero to one Trillion dollars in annual revenues. We have literally witnessed the setting of a world record in growth of any industry. Even as the world went through two economic downturns in the past ten years, mobile grew strongly through both of them.

Then last year we had Apple fighting for the lead for the most valuable corporation by market capitalization (which it has since seized and is now increasing that lead). But few remember that less than two decades ago, Apple was on the brink of bankruptcy. They brought back Steve Jobs to rescue the company, and he steered Apple to the mobile future. So much so, that the company whose official name was Apple Computer, and had launched highly successful new series of Macintosh PCs and the iPod music player and iTunes store - changed its name to only 'Apple' when Jobs announced the iPhone. Since then Apple has called itself a 'mobile' company. Today the iPhone delivers more than half of Apple's revenues and most of Apple's profits. Like I say in my seminars and workshops - Mobile is the Magical Money-Making Machine. This is very literally and factually the strongest industry on the planet, with the most robust growth, the strongest profits and thus it is the best place to be for any company or person to build a success.

But its no longer just the PC industry which is excited about mobile. Look at statements from various industry giants outside of technology. Visa said in 2011 that the future of payments is mobile. And they were not talking about contactless payment plastic cards. They were talking about mobile phones. Google's Chairman Eric Schmidt wrote on Harvard Business Review last year, that mobile money is one of Google's top priorities. What? The internet giant known for advertising intends to take on Citibank and American Express and Paypal? In mobile? Yes. Google has been mad about mobile for seven years now, and their internal mantra is 'Mobile First' - meaning that for any Google initiative today, they will deploy the mobile variant first. This from the company that set the record for fastest growth from zero to entering the Fortune 500. And they say the future of the internet and advertising (and money) is.. mobile.

Facebook and Twitter say the future of social networking is mobile. BBC says the future of broadcast is mobile. Tesco's the big UK retailer feels mobile is vital for the future of retail. Gaming is rushing to mobile (Angry Birds, anyone?) and music is already on mobile. Even print media are rushing to embrace mobile from MMS based highlight clips to Augmented Reality enhancements to print editions.

Its not just business. Government is increasingly turning to mobile. Politics is embracing mobile. Healthcare is providing assistance via mobile. Education is using mobile to help in learning. This is by far the most dynamic and most exciting industry to be in. And with that, lets start to dig into the numbers today. All data in this blog is current as of December 31, 2011 and yes, you may freely quote all the data on this blog (please list the source as TomiAhonen Almanac 2012).

5.9 BILLION SUBSCRIBERS

When I left Nokia ten years ago to start my own consultancy, the global mobile phone subscriber count was at 700 million - there were more fixed landline accounts (1 Billion) globally than mobile accounts. The leading countries like Finland, Hong Kong, Austria, Italy and Israel had passed 80% mobile phone penetration rate per capita, and one country, Taiwan was past 90%. Yes it was an exciting time, but even the mobile industry itself did not foresee this incredible growth. The industry expected the world to have 2 Billion mobile phone subscriptions by the end of the decade - a huge growth of tripling in size in one decade. The reality was quite different. By the end of 2010 we had 5.2 Billion mobile phone subscriptions on the planet (prepaid and post-paid, combined). All sensible analysts predicted that the growth rate would slow and nobody expected half of Africa to be connected. How wrong we all were.

Today more than 77 countries have passed 100% mobile phone penetrations per capita including the mobile laggard country, USA which finally reached that level last year. Meanwhile the leading countries continue to push past 150% and past 175% and even yes, past 200% mobile phone penetration rate - as the UAE did becoming the first country with literally two mobile phone accounts for every living person of any age.

The planet has a population of 7 Billion people alive. And now there are 5.9 Billion active mobile phone subscriptions. That is a global penetration rate of 84.3%. To put it another way, if we allocated all mobile phones to every living person by age, starting with the over 100 year olds, and then proceeded down every person alive getting one mobile phone subscription, today the ages we would cover comes down to everybody older than the age of .. eight! Yes, if the 5.9 Billion mobile phone subscriptions were distributed evenly, every single person on the planet age 9 or older, would have one.

Makes you think? In one decade this industry grew more than 8 fold. This mobile industry has sustained a compound annual growth rate of 24% year-on-year for a whole decade! (when measured in its paying customers, obviously, the revenue growth is not quite that dramatic while also good). Even the past year, we grew new customers from 5.2 Billion to 5.9 Billion, adding 700 million new customers in the past year. The whole mobile industry had only 700 million customers a decade ago! The growth rate of adding 700 million new customers to 5.2 Billion is still an enormous 13.5% in just one year.

Compared to the landline cousin, ten years ago fixed landline was the big brother of telecoms, at 50% bigger. Today, if a telephone rings anywhere on the planet the odds are 5 to 1, that the phone ringing is a mobile phone. Yes, the picture is so lopsided, that for 5.9 Billion mobile accounts, there are only 1.1 Billion fixed landline telephones worldwide.

When will we reach 100% per capita mobile phone accounts. Some have started to push early numbers now for 2012. I saw a Cisco projection claiming we'll hit that milestone this year. I think that is premature, but definitely by Spring of 2013, the world will pass that incredible milestone, that when measured per-capita, there will literally be more mobile phone subscriptions than people alive on the planet. I do not think we will see that number this year, but we will definitely see it by Spring of 2013.

4 BILLION UNIQUE USERS, 4.8 BILLION HANDSETS IN USE TODAY

A mobile phone subscription is not a unique user. Some still are astounded by the stats, but yes, increasingly we, perfectly normal people, are walking around with two mobile phones in our pockets. And in many markets the competitive situation is such, that consumers switch between carriers/mobile operators by swapping the SIM card, so you might have two or three or four mobile phone accounts and use one phone. Several manufacturers have introduced Dual SIM phones (mobile phone handsets with slots for two separate SIM cards, allowing the user to switch between two networks without swapping out the cards). The first Triple SIM phones have already appeared.

Just to be clear. Why two phones? Imagine having a phone from work - a Blackberry. But your employer has tight controls on what you can and cannot do on that phone. So you get yourself an iPhone as your private phone. You are now part of the population with two mobile phones (and two mobile phone accounts). If you have a data dongle for your laptop or netbook or iPad - that would be a third cellular mobile account..

I was the first telecoms expert to expose the bizarre concept of multiple phone ownership (because it happened first in Finland and it was first observed by my team when I was employed by the Finnish telecoms operator/carrier group Elisa/Radiolinja/Helsinki Telephone at the time in the late 1990s) and have been reporting on the phenomena ever since. So my consultancy has also provided the most accurate counts of how many of the planet's total mobile users are 'unique' users and how many of those accounts are second and third accounts. This is the far more relevant number to consider on a planetary migration to digital connectedness. How many 'unique' users are there on mobile, after we remove the second phones and the multiple subscriptions.

Its an easy number to memorize for this year - 4 Billion. That is the unique mobile phone user number. That is 57% of the total population of the planet, which very literally - not by statistical gimmicks - very literally do have an active mobile phone subscription (prepaid or post-paid) and at least one mobile phone handset that they use.

And you might ask what of the total number of mobile phone handsets in use. That number will be more than the unique users (some have 2 phones) and it will be less than the 5.9 Billion total subscriber number (because some only have SIM cards on rival networks sharing one phone on them). My consultancy now reports the 2011 number for total active mobile phone handsets in use and with a live paid subscription to be 4.8 Billion. Wow. 4.8 Billion pocketable digital communication devices that are in use on Planet Earth every day. Wow. That is huge.

How big is 4.8 Billion? There are 970 million cars registered and in use worldwide. There are 1.1 Billion landline phones. There are 1.3 Billion personal computers of any kind including desktops, laptops, netbooks and tablet PCs like the Apple iPad - all combined. There are 2.2 Billion internet users (including office use, home use, shared use at internet cafes and schools etc, and mobile internet users). There are 1.8 Billion television sets and 4 Billion radios in use globally. But 4.8 Billion actual mobile phone handsets in use! Wow, that is an enormous number. Or let me put it this way. If you take all television sets in use in the world, and add all personal computers of any kind including laptops and tablets, and add fixed landlines - their combined total - 4.2 Billion is still less than the 4.8 Billion mobile phone handsets currently in our pockets globally. Massive! Obviously much more on mobile subscribers, also regionally, and by age, and across the Digital Divide in the TomiAhonen Almanac 2012.

THE AVERAGE USER?

So with 4 Billion unique users and 5.9 Billion total mobile subscriptions, clearly there are 1.9 Billion 'second or third' (or fourth etc) accounts. How many of us therefore actually have more than one account? The number is now 1.5 Billion people or 37.5% of the total number of unique users, actually walk around with two SIM cards or more in their pocket. 400 million of those have three or more active mobile subscriptions (mostly pre-paid accounts).

And yes, 3.2 Billion people on the planet who have a mobile phone account, are satisfied (or can only afford) with one handset, but 800 million people already walk around with two phones in their pockets (some ultra-geeks like me have 3 phones, haha, but that number is too small to register in the big picture). So yes, one in five of us, literally 20% of anyone who has a mobile phone, walks around with two connected phones in his or her pockets (and/or purse in the case of the ladies..)

Its no longer 'weird' to have two phones. One fifth of all who have a mobile phone today, actually use two phones daily. Not just two accounts, two actual phones. This is a remarkably different reality from the one imagined by industry thought-leaders a decade ago, when they were planning mobile phone handsets for the future. The mantra was the perfect device, that would do 'everything' but now if we have two devices, we will of course optimize. One is great for texting - has a great QWERTY keyboard like a Blackberry, while the other is great for surfing, has a big touch screen like the iPhone. Or if we love our cameras, we have one camera-optimized phone in one of our pockets like the Nokia N8 or the HTC Titan 2, etc.

SMARTPHONES

And what of the normal user? How many of those mobile phone handsets are smartphones then? Not that many actually. Globally the installed base is still 81% non-smartphones, what I call 'dumbphones'. Some are very advanced 'featurephones' that have cameras, big color screens, full internet browsers, and often improved input methods from QWERTY keyboards to touch-screens. These would typically cost in the 50 to 100 US dollar ranges without any handset subsidy ie no contract. Still others are of the ultra-cheap type that do only voice, SMS and have perhaps some rudimentary functions and facilities - a flashlight/torch, an FM radio and a clock. These can cost under 25 US dollars without subsidy. Many of the phones in use are older, often second hand, so there is a large pool of hundreds of millions of older Nokia models still in circulation especially in the less-affluent countries in the Emerging World. Also our younger kids often get hand-me-down phones which may be a two-year old Samsung or SonyEricsson or indeed an iPhone 3GS.

So 19% of the installed base of handsets globally are smartphones. That is an increasing ratio, last year it was 17%. The new sales of mobile phone handsets this year passed 1.6 Billion units, and 30% of them - 486 million - were smartphones. By the fourth Quarter, ie Christmas sales - a third of all mobile phones sold were smartphones. So we are well on the way on that transition which is now unstoppable, that eventually all handsets in the world will be what we now define as 'smartphones' (but the actual form factors and specifications will of course evolve).

Most who read this blog will have an interest in the Industrialized World, and with us in the most affluent parts of the planet, the migration to smartphones is well along already. In Europe the installed base of smartphones corresponds to a 41% penetration of smartphones per capita. In many individual countries like the UK, Netherlands, Switzerland and Finland, the tipping point has been passed where there is a smartphone now for half the population (bear in mind, with these 'per capita' calculations, we still have the dual phone phenomenon - so in reality some wealthy employed white-collar workers will often have two smartphones). North America passed the point last year where there is a smartphone for one third of the total population per-capita. In advanced countries of Asia-Pacific like here in Hong Kong or Australia and Singapore etc, the penetration rate of smartphones per capita is almost half, at 48%.

This tracks perfectly the sales patterns too. Last year the US market reached the point where half of new phone sales were smartphones. Europe was there a year earlier and advanced countries of Asia-Pacific were reaching the half-point of new handset sales by 2009.

But others of my readers are interested in the Emerging World (or the full global view). So lets not forget that. I can report that in the Middle East the smartphone penetration level per-capita is past one third, at 37%, slightly ahead of North America. Some of the leading countries like Qatar, UAE and Israel are well ahead of the mainstream Europeans and the Asia-Pacific region. Latin America has passed the point of a smartphone for one out of five people, the per-capita penetration rate is 22%. In the less-affluent countries of Asia, which includes most of the big population countries like China, India, Indonesia etc, the smartphone penetration rate is 12% per capita. And in Africa its still in the early days, with smartphone penetration rate of 3% per capita.

How many smartphones will be sold this year? I am projecting about 750 million, which would be about 44% of all new phones sold. The migration is continuing and the global smartphone installed base will pass the 1 billion level by the second quarter of 2012. We will end the year with something between 1.1 Billion and 1.2 Billion smartphones in use worldwide, which starts to approach the installed base of all personal computers of any kind including desktops, laptops, netbooks and tablet PCs like the iPad.

While everyone obsesses about the iPhone and Android (and Windows haha) the global installed base of smartphones by operating system is still dominated by Symbian. Not for long, because of Nokia's suicidally stupid move to end Symbian last year, while it towered over all rivals - and was growing new sales strongly - but yes, even now, more than one year after the infamous Burning Platforms memo that destroyed Symbian's (and Nokia's) future, this is the picture of the installed base:

Last year 2011 was the first time that more smartphones were sold than all types of personal computers added together including desktops, laptops, netbooks and tablet PCs like the iPad. I have also been calculating the global 'computer manufacturer' market shares annually, when smartphone shipments are included in the overall numbers. The chart for last year for the biggest PC makers with smartphones included is here. And for those who need all the nitty-gritty about mobile phone handsets, feature sets, market shares, regional penetration rates, and market sizes for the major countries, the obvious total data source is the Tomi Ahonen Phone Book 2010.

WHAT DO WE DO ON MOBILE?

So what do we do on our mobile phones? The obvious answer used to be 'we make voice calls' and some smartphone users might say 'download apps' or perhaps that we 'surf on the web'. That is all fine and good, but the truth of the matter is that last year marked a major milestone in the 'mobile' industry, where the primary use of the mobile handset is no longer voice calls - and no, its not apps nor is it web surfing either. The primary use worldwide - and the one with most users today - is SMS text messaging. Yes, last year, only 18 years after SMS text messaging was first offered as a commercial service for consumers, our favorite messaging method has passed voice calls in total users. SMS text messaging is used by 85% of mobile phone users - 5.0 Billion people - vs voice calls that are only used by 83% of mobile phone users (4.9 Billion people). Apps and mobile web come far lower on our list of preferences. And its good to see that even the USA is finally embracing SMS wholeheartedly. Pew reported in 2011 that the active user level of SMS text messaging had reached 88% of US cellphone owners. That compares to 90% in Pakistan, 91% in Brazil, 91% in China, 96% in Indonesia. Most of Europe has passed the 90% user level years ago for SMS text messaging.

So its time to end calling it a mobile 'phone' (or cellular 'phone') - because voice calls are no longer the most used service on our mobile handset devices. I am trying to learn to call the device just a 'mobile'. But lets talk about SMS text messaging a bit. First how big is 5.0 billion? Compared to total email users - SMS is three times bigger. Compared to all landline telephones? SMS is 4 times bigger. Compared to facebook? Over 5 times bigger. Active users? SMS text messaging grew users last year from 4.2 billion to 5.0 billion ie 16% growth in total paying users. In just one year! The traffic in SMS text messages grew even more - by 18% and while the carriers/operators kept giving huge bundles of 'free' SMS messages in various pricing packages, the revenues of SMS globally? Still grew 5% last year reaching 126 Billion dollars worldwide! The SMS industry earns a fresh new million dollars every four minutes of every day, day and night, 7 days a week, 52 weeks a year. SMS alone is bigger than Hollywood movies and the global music industry and videogaming - all added together. Or to put it another way, SMS text messaging alone is bigger than the revenues of the global radio broadcast industry. Not bad for an 18 year old haha.

DON'T FORGET MMS

And then we have the other monster mobile messaging success, MMS picture messaging. The versatile MMS is exceptionally well suited for various media and advertising uses, but also has a growing user base in consumers who send pictures. The usage of MMS has now passed 43% of the total mobile subscriber base and at 2.5 Billion active users, MMS now has more users than the total of people who access the internet by any method (at work, at home, at shared computers at libraries, schools and internet cafes; and via mobile internet). MMS became the second most used data service on the planet last year. And what a service. MMS user base grew by 21%, and MMS revenues grew by 15% reaching 39 Billion dollars last year! Much of the premium revenues are generated by various media and advertising uses as media brands learn that MMS answers most media issues with SMS - MMS allows longer texts than 160 characters of SMS; and MMS allows adding sounds, pictures and video clips. MMS is also an increasingly popular transport vehicle for coupons, offers, tickets, boarding passes, receipts etc

WHAT OF MOBILE DATA?

You may have heard some say that soon there will be more users of the internet on moble phones than on the PC. Those 'experts' are severely misguided. We passed that milestone two years ago as reported widely from IBM to Nokia. Now we have the latest count of browser based service use on mobile handsets for 2011. Today the number of mobile internet users (including WAP) is 30% of all mobile subscribers - and thus 1.8 Billion total people worldwide - browse internet content on their mobile devices at least part of the time (in the Industrialized World most of us will also have access to a traditional PC). Still out of all 2.2 Billion internet users worldwide today, less than 400 million use a PC exclusively. Over 1 Billion use both a mobile device and a PC to access the internet - and in 2011, 800 million use a mobile handset exclusively as the internet access device. In six of the world's ten largest internet user countries the mobile use is bigger than traditional PC based use (China, Japan, UK, India, Russia and South Korea).

And what of news? An astonishing milestone also has now passed. The global user base of news and alert services on mobile is 1.9 Billion. Why is that a relevant number? Yes, its four times more than the total circulation of all daily newspapers worldwide - so even accounting for three readers per newspaper, mobile news still now has more (paying) users than total readership (paid and free-loading) of all newspapers printed. But that is not the astonishing number. Now mobile news has passed the total number of television sets in use globally! No wonder the Associated Press Managing Editors declared in September of 2011, that mobile was the future of news.

How about advertising then? Sure. That too is exploding globally. JP Morgan told us a year ago that the total value of all mobile advertisingin 2010 globally was 11.5 Billion dollars. I now have the update to that number, for 2011 that was 14.4 Billion dollars (including advertising on various new ad platforms such as the branded smartphone apps etc). How many people receive ads on their phones? 3.4 Billion people worldwide, or 58% of all mobile phone owners. Most of that is now banner advertising, with SMS text messaging based ads second, MMS third and the rest such as search, location-based ads, adver-gaming, branded smartphone apps, etc making up the rest. For those in the marketing and advertising (and perhaps media) industries who would like to understand mobile advertising more, please see Tomi Ahonen Pearls Vol 1: Mobile Advertising.

WHAT DO WE DO ON OUR PHONES?

Here is an abbreviated chart is exceprted from the brand new TomiAhonen Almanac 2012 of the types of activities we do on our mobile phones today, as a percentage of all mobile phone subscribers:

Note for example the active user base of cameraphone based digital cameras at 4.2 Billion (or 71% of all mobile phone users). It is four times more than the installed base of all non-phone based cameras on the planet, including digital and film based stand-alone cameras and videocameras, combined. Much more such user info in the new TomiAhonen Almanac 2012 if you need more data.

The mobile has become indispensible for us. Its more than a communication device, it now has our clock and alarm, it has our calendar and reminders. We use the camera not just to take 'traditional pictures' but also as a memory tool taking pictures of what we should remember to buy at the store and where we parked the car. We store vital information at the phone book and we store valued SMS text messages with information such as addresses and parts numbers etc, to the romantic message that so touched us that we want to keep it forever. Nokia reported a year ago that the average person looks as a phone 150 times per day. For every waking hour, that means you and I look at our phone once every 6.5 minutes. Those heavily addicted teenagers do it even more - although they are so proficient at their phones, they often don't need to look at the phone to send their messages.

SO WHERE IS THE MONEY?

Ever since my second book (M-Profits the first business book for the mobile industry) my obsession with this industry has of course always been the money. Where are the revenues, how are the profits generated. And even while many still are hyping the smartphone apps space, that is not where the money is. The mobile industry is a juggernaut. The mobile industry is the youngest Trillion-dollar sized giant industry on the planet, and reached that level only three years ago. Last year the world economy grew between 3% and 4% in size. In the same period, the mobile industry grew revenues by 10%. The mobile industry is now worth 1.3 Trillion dollars (1,300 Billion dollars).

Most of those revenues are earned by the carriers/operators whose total revenues last year passed 1.02 Trillion dollars. 651 Billion of that was in voice call revenues and 186 Billion was in various mobile messaging service revenues. 179 Billion dollars was in premium data services. Beyond the operator/carrier revenues, there was also equipment sales consisting of handsets, networks and various accessories.

So yes, the very first mobile telecoms service as we know it, on a cellular network service, was launched commercially (in Japan, by NTT) in 1979. It took this industry only 29 years to breach the 1 Trillion dollar level. So we have been witness to the establishment of a world record in the fastest growth of any new industry. No wonder the world's richest person is now Carlos Slim of America Movil and high tech companies from Apple to Google say their future is in mobile.

And what are the companies that lead this industry? I also provide the listing of the biggest global corporations - when their non-mobile business is removed. So after we remove the Macintosh PCs from Apple and remove the plasma-screen TVs from Samsung and remove the fixed landline business from Vodafone, who are the biggest companies on their 'pure mobile' business. The latest top 10 list of the biggest companies purely on their mobile revenues looks like this:

That is the Top 10. I published the Top 25 on this blog earlier if you want to see that, and to find out more about my quirky names for some of those imaginary companies, and how they would rank in the Fortune 500 etc.

ABOUT THOSE APPS

I have been monitoring the despair of the app developers in attempting to monetize the smartphone app space. Apple is about to celebrate its 25 Billionth iPhone app download but before you cheer that big milestone, bear in mind, Apple has only paid out a total of 4 Billion dollars so far. So Apple, the most successful app store, in its four years of existence, has only generated 5.7 Billion dollars of total revenues cumulatively (of which Apple kindly keeps 30%). Those 25 Billion downloaded apps have shared 4 Billion dollars of developer revenues in total or about 20 cents per downloaded app. Its not a way to get rich, if the median app gets under 1,000 downloads (meaning, half of all apps out there get even less than that). Obviously most apps on the App Store are free apps, so yes, the numbers are somewhat better for the paid apps, but this is no goldmine. I have been cautioning audiences globally to beware of the app store opportunity, it is a treacherous one, and its not anywhere near the easiest way to make money in mobile. And while we are on those numbers, the total smartphone app revenues in 2011 were now 12 billion yes, but those were not all 'app store' type of consumer apps.

Like in years past, the majority of the smartphone app revenues were still generated by enterprise/business apps, such as those for the Blackberry enterprise users, sold often with licenses counted in the thousands or more. Consumer apps associated with 'app stores' only were worth 5 Billion dollars last year, 2011, and enterprise apps were worth 7 Billion dollars, giving us the grand total of 12 Billion dollars last year for all types of smartphone apps. 12 Billion may seem big perhaps. But before you get excited about that number - all apps revenues formed only 4% of the total mobile data revenues opportunity last year. Yes, you are far better off going where the big opportunities lie such as in gaming, news, social networking, music, television related services (like TV voting) etc. That is why Coca Cola has a rule of 70:20:10 about their mobile strategy - they put 70% of their mobile dollars to SMS and MMS mobile messaging; they invest only 20% to the mobile internet; and only 10% in mobile apps. Or the simple way to say it, is like US food giant Kraft, whose mobile strategy is 'no mobile left behind.' They too start with SMS and MMS, then do mobile web (and WAP) and only after no mobile has been left behind, do they bother with the apps side of smartphones. Similar thinking is with Finnair the airline that invented the mobile check-in and a similar mobile philosophy is for example used by the German railway system.

Incidentially where is the strongest growth in profits and revenues, if not in apps? Its in mobile social networking (think Facebook and Farmville but on mobile). And conveniently, if you so desire, I have a book for you on that, with 50 case studies of excellence in user-generated content, citizen journalism, virtual worlds, dating, flirting, picture sharing, multiplayer gaming, social networking etc. The ebook is called called Tomi Ahonen Pearls Vol 2: Mobile Social Networking.

WHO IS THE LEADER? JAPAN OF COURSE

This is a difficult complex industry - far more complex than rocket science actually - and very difficult to fully comprehend. But the industry was launched in Japan, and for most of the commercially viable innovations of this young industry, Japan and Finland have taken turns in the leadership, with South Korea, Sweden and Norway often also playing major parts. But recently some innovation has come from the USA, especially relating to those smartphone apps (even though, some of the most successful - like Angry Birds by Rovio comes from Finland - or the most futuristic and innovative - like Layar the Augmented Reality Browser comes from the Netherlands). So it becomes difficult to know where to go to see the future in mobile. Where is the leadership? I have done the math for you. I use a formula which combines the four most used measures of mobile industry leadership (mobile subscription penetration rate, the generation(s) of the networks in use, the adoption of mobile data services, and the level of how advanced the handset installed base is, ie smartphone penetration rate). The world's leading mobile country once again was Japan for 2011, here is the Top 10 list as I calculated it:

If you were looking for the USA, it didn't make the top 10 but is ranked 17th (up from 19th in 2010). You can see the Top 20 list here, and the Top 30 list with far more information is of course in the TomiAhonen Almanac 2012.

IT ONLY GETS BETTER

But its not ending there. The world's largest lock-maker, Assa-Abloy is deploying locks for hotels and homes that can be operated by mobile phone. Google, Nokia, Vodafone and many more mobile giants are in a race to deploy mobile money solutions around NFC Near Field Communciations, a new technology coming to our phones - 19% of Japanese already make such payments.. daily. You may have heard of the border-crossing incident on the US-Canadian border where a stranded visitor had lost his passport, but had a scan of it on his iPad and was allowed to pass over the border. I have been saying for some time now, that in the future our passports will be on our phones. But today, I advise all friends and collagues to make scans of our passports and driver's licenses and save them on our phones, just in case you are in a similar situation. While such a scanned image is not necessarily legally valid, it is far better than nothing - and if you have a good cameraphone (5 megapixel or better) all you need is good sunlight, take a picture of your passport and driver's licence and save them onto your phone(s).

Meanwhile the innovation in mobile is relentless. Turkey became the second country after Spain, to accept SMS based signatures as legally binding in contracts last year. Estonia became the second country after Norway to accept SMS based tax returns! And after Sweden launched it, there is now a race for which country is the first to stop the manufacturing of coins and banknotes altogether - replaced by mobile money. Kenya has passed the point where 30% of its GDP is now going through mobile phone money accounts. The 'usual suspects' are in the race of course including Finland, Norway and Estonia; including Japan and South Korea; including the Philippines and South Africa; as well as some less obvious countries like the Netherlands and Somaliland. But the first country to give a target date for when they expect to eliminate cash is Turkey - and they said in November of 2011, that their target year is 2025. That is only 13 years from now!

If we go back 13 years to 1998, that was the year of the movie Titanic and when Bill Clinton had his Monica Lewinski scandal. Google was launched that year. Tony Blair was Britain's Prime Minister. And now only a similar amount of time into the future, we may see the first country to end the manufacturing of cash (and this being a race, it may actually happen a little bit earlier in some other ambitious country). Wow. After several thousand years, we will be the generation to see the end of cash as a monetary instrument, in our lifetimes. Killed by mobile. And yes, if you needed to read a quick book about mobile money and payments, check out my Pearls Vol 3: Mobile Money.

My dear friend and fellow mobile statistician and forecaster, the author Chetan Sharma says the world will change more in the next 10 years, than it has in the previous 100 years. The driving force in that change is mobile, as mobile is a robust, economically sound industry, not clinging desperately to some advertising-based revenues alone. This is the best economic opportunity of our lifetimes. And not just in strict monetery terms, obviously also if your passion is in education, please substitute 'learning' for profits; or if you are in m-health, consider healthcare benefits rather than revenues. And so forth. But this is the richest and most rewarding opportunity and the epicenter of creativity. No wonder Google's Chairman Eric Scmidt says 'Put your best people on mobile'.

UPDATE 29 FEB - I have announced the release of the TomiAhonen Almanac 2012. With that publication I added some exclusive data from the Almanac with four charts (out of 96) published in total and some other excerpted sample data from the Almanac. You may find the data useful especially if you are interested in the mobile internet, gaming, music, handset installed base, or the 'Digital Divide'. See more here TomiAhonen Almanac 2012 Released.

WHERE NEXT?

This article is using data from the brand new edition of my annual statistical volume for this industry, published in ebook format, called the TomiAhonen Almanac 2012. You may freely quote any of the data in this article, please mention the TomiAhonen Almanac 2012 as your source. And if you are interested, the Almanac has over 90 tables and charts, is a 184 page ebook. conveniently formated for the small screens of smartphones so you can carry all the stats in your pocket with you and only costs 9.99 Euros for immediate download. Please see more including sample pages at this link TomiAhonen Almanac 2012.

If you need more information about the handset side of the industry, my Tomi Ahonen PhoneBook 2010 is still very current with all the data about cameraphone resolutions, screen sizes, smartphone operating system market shares etc. Similarly formated and priced 9.99 Euros, also at over 90 tables and charts in an 180 page ebook, the sister volume to the Almanac, focusing only on the handsets side of our industry is the Tomi Ahonen PhoneBook 2010.

February 16, 2012

I was honored to receive an autographed copy of Alan's latest book, No Straight Lines - thank you Alan!. I kind of knew what it was about, as I have seen Alan talking about his 'No Straight Lines' themes and where he sees the future of business and digital convergence and 'communities dominate' etc going. I always learn very much from Alan whenever I see him speak - or read his writing - and obviously we share a lot of similar views about the future of tech, business, media etc. I also enjoyed Alan's previous book, Social Media Marketing. And I thought I knew what to expect out of No Straight Lines

I read it on the plane on the last two trips, just finished it. I want to give you my thoughts having just finished it. And where I thought it would be a kind of logical next step for Alan's writing - as he started with me with Communities Dominate Brands, looking at the role of social networking, and how it impacted (from Alan's point of view in our collaboration) his traditional background in advertising and media (whereas for me it obviously hit mobile and tech equally hard). That followed quite logically into Alan's next book Social Media Marketing he co-authored with Jouko Ahvenainen, Ajit Jaokar and Brian Jacobs. In that book Alan and his co-authors went kind of 'deeper' into the 'Communities Dominate' thinking, and focused on social media, marketing and advertising and the role of influencers, etc. A very logical step after our book. And I thought I knew what to expect out of No Straight Lines, thinking that as this was now Alan's own (not co-authored) book, it would be even more a hands-on 'how to' book for specifically his peers and background, ie advertising, marketing and media. It would have been well suited considering what Alan often talks about, especially where we are both together providing some consulting for a client of ours, or lecturing at the Oxford University course on 7th Mass Media etc.

And yes, indeed, No Straight Lines does touch on social media and media and marketing and advertising. To some degree. It has chapters like 'Gutenberg as a moblogger' and 'hacking the future.' Alan has plenty of material there such as one of my fave case studies right now, Girlswalker of Japan, the teen youth mobile fashion magazine and fan club. And if it had been just a book about the latest thinking of media meets tech meets social networks, I would have been very happy to read Alan's latest thoughts on that. Except that it was much more.

Reading No Straight Lines, I could hear Alan speaking in front of a seminar audience, or recall vividly him and me debating and editing the content into Communities Dominate Brands. And I forgot how much Alan had a true business focus to his thinking. A profit and sustainable business and financial focus to his purpose. You think I am obsessive about money and profits here on my blog stories, Alan thinks even more 'rationally' about realistic business solutions, not some silly unsustainable fantasy-economy concepts. That was the first thing that came vividly across the whole book - it is far more than a Social Media book, a Business Strategy book. Alan looks at such fantastic ideas as Local Motors and Grameenphone and GrowVC as well as the obvious stories like Skype and M-Pesa. I remember being particularly pleased when some reviewers said of Communities Dominate Brands, that it is a very good business strategy book, something Alan and I didn't really plan to write, but what did emerge. I would have been happy for it to be 'just' a tech book. Now reading No Straight Lines, I see the strategy thinking even more strongly in Alan's own words, and obviously written six years later. I think No Straight Lines is perhaps the best book in the world right now, to explain business strategy in a 'no straight lines' world of competition and cooperation, of digital and analog, of reality, the virtual world and yes augmented reality. I found myself regularly pausing my reading to jot down an idea or to pause to think - and I thought I knew well what is on Alan's mind today haha..

But to call No Straight Lines a business strategy book, is still not fair. Alan weaves another even more compelling thread into the book. It is a strategic management book, beyond just 'business' and 'profit'. He takes on social issues from government and politics to education and healthcare, consistently in the themes of the book. The text is far more wide-reaching than 'just' a business book. Alan's latest book is a comprehensive treatise of management and leadership and participation and creativity in a modern, digital, interconnected, networked world. It is an ironclad must-read for anyone in government, in education, in healthcare, in business, in technolology, in manufacturing, in media and yes, also in advertising. I most warmly recommend the book to anyone who reads this blog as it currently is, mostly with me writing about mobile and tech; as well as all those early readers of this blog, when we focused more on themes taken from the book Communities Dominate Brands, about social media, gaming, virtual worlds, digital convergence, marketing and advertising.

I know it takes a lot of energy to write a book alone, and I congratulate Alan my dear friend on a masterpiece. This is your finest work, Alan and I recommend anyone who is interested in business, management and society of the 21st century, to read No Straight Lines - at least twice!

We are having an interesting debate and discussion on Twitter about the use of the Twitter handle or nickname - like for me my Twitter nickname is @tomiahonen (no surprise) - on the business card. If you want to follow - and join - the debate, the hashtag is #twbizcard - add your thoughts.

But to summarize so far. I thought it was pretty obvious and included my TW handle already a few years ago. I thought it was 'a no brainer' ie obviously beneficial. Then on TW we started that debate and clearly there are very good reasons why not. First, that business cards are provided by employers (businesses) and the Twitter name may be personal. Some companies may not want that, and the individual - who may not remain with that employer forever - may not want to give the Twitter name to the (former) employer. I never thought of that, as I am my own boss haha.. And then there is the personal vs business use of Twitter. Again, for me its no issue, of course I use TW just like this blog to promote myself and my business. But many use TW for personal stuff and it may not be obvious to include the TW name on a business card.

Separately we have the discussion about the pending death of business cards. Many have stopped printing them and only use electronic cards. For that, I just say that for now, here in Asia, if you do not have an actual business card, you are not 'very modern' - you are 'insignificant' haha. Here the culture demands that if you are important enough to come to a meeting, you must have 'name cards' - the more impressive the better (and there is a whole etiquette on how to present and receive business cards).

So just to let blog followers know, if you hop in on Twitter to the hashtag #twbizcard - you can read the debate so far and please add your thoughts. Should we all be printing our Twitter nicknames to our business cards (and I add when talking of business cards, if you are a true mobilista - make sure your next business card has a QR code if it doesn't have one already.)

February 15, 2012

Time to do the final count for 2011 smartphone numbers. This is the one big blog about all the smartphone numbers you could ever hope for.. So please mark this page for your reference in the future and do send your colleagues here too. If you blog or write about smartphones, you may want to link here.

As always, this Quarterly and Annual blog article series is as heavily based on global stats and facts as possile. So each of the major smartphone manufacturers has provided their Quarterly results for Q4 (not all provided the numbers we hoped to receive) and the big 4 analyst houses (Gartner, IDC, Canalys and Strategy Analytics) have each given their count of total smartphone sales (or shipments, depending on their methodology). As usual, I use the average of the big 4 as the starting point, then use the best available info to calculate or closely estimate the actual numbers for each individual brand. If you want to see last year's numbers and analysis, they are here.

So while my own analysis suggested somewhat a larger number of smartphones sold in Q4 when adding all of my individual data points, the total we have to live with for Q4 is 155.1 Million units sold. And yes, we have now celebrated the first full year when smartphones have sold more than all types of personal computers (including tablet PCs like the iPad) combined. I do a separate calculation of the biggest computer makers by units sold, when smartphones are included in the count. Last year's top manufacturer list is here.

This blog article is also my official estimate (and that of my company, TomiAhonen Consulting) of the market shares both for Q4 of 2011, and as we finished the full year, this is also the final count for the full year 2011. As I started to do a year earlier, in 2010 the 'Year of the Bloodbath' in smartphones - I also will grade each major smartphone maker for the quarter and full year, for their performance with some commentary for this ended year 2011 which I called 'Year 2 of the Bloodbath, the Electric Boogaloo'.

I know some want the big picture numbers so here they are, first the full year - what will be most useful in the longer run - and then the Q4 results:

Source: TomiAhonen Almanac 2012This data may be freely used and repeated

The overall industry grew by 63.2% in just one year. Apple did incredibly well growing by 96% and taking top honors for the year. Samsung had an even more monsterous year, more than tripling in size growing by 279% and coming within a hair from the top. Past master, Nokia which was bigger than its two nearest rivals put together just a year ago, had a horrid year, declining by 23% for the full year and tumbling from the top to third place and losing more than half of its market share within one 12 month period - this is a world record fall for a market leader in any industry ever, in a period of only one year. RIM was also often called for a lousy year, but at least they managed to grow a bit, with 9% growth for the year and falling in rankings from 2nd to 4th. HTC, ZTE, SonyEricsson - since rebranded to only Sony - and Huawei had strong growth years. Motorola had a bad year and was bought by Google. Sharp and Fujitsu fell out of the top 10 chart replaced by ZTE and Huawei.

Source: TomiAhonen Almanac 2012This data may be freely used and repeated* - the two operating systems, bada by Samsung and Windows Phone by Microsoft were launched at the end of 2010, so the full year-to-year comparison is not valid. See analysis below by each brand of smartphone OS

In the operating system wars, Symbian and Android essentially swapped places, Symbian fell from 39% to 17% while Android went from 18% to 43%. In the second battle, Apple's iPhone iOS pulled strongly ahead from its near rival Blackberry OS and iOS even passed Symbian in the process. Among the backmarkers, Microsoft's new Windows Phone finally passed its older and incompatible sibling, Windows Mobile but still lingers in the 1% range. Samsung's bada has pulled well away now being almost twice the size of Microsoft's best. Among the others we find past major platforms that died like Palm Web/OS, Maemo and LiMo, as well as the orphaned new Nokia and Intel OS MeeGo among many others.

Please remember, I am only counting smartphones. So for example iOS has a larger number of new sales (and installed base) due to iPads and iPod Touch devices. Same true for many of the platforms, Android is increasingly also on tablets etc. The data in this blog is always only about smartphones, not all possible digital devices that might use that platform.

Symbian still rules the world in the installed base of smartphones, benefitted also by the strong second-hand appeal of Nokia smartphones in Africa and less affluent parts of Asia and Latin America. Android's strong growth will move it past Symbian shortly in the installed base. Apple and RIM fight for the title of third and fourth biggest OS by installed base. And two years from launch, Windows Phone is nowhere near the reach of its older incompatible cousin, Windows Mobile and continues to be overshadowed by Samsung's bada.

Q4 NUMBERS

That was the full year. But the smartphone bloodbath was indeed quite tumultuous in year 2011 and the Q4 numbers will be much more indicative of where the race stands today, than the full-year picture which is obviously somewhat lagging. So lets do Q4 results

Source: TomiAhonen Consulting 2012This data may be freely used and repeated

The fight was tight between Samsung and Apple as we expected. As Samsung didn't release official numbers, I used the average as reported by the Big 4. But none of the four had Sammy ahead of the iPhone so we can safely trust that this ranking order is correct. Yet it was close. Nokia continued its slide after the Elop Effect. RIM and HTC reversed positions with Blackberry having a resurgence. Sony (ex SonyEricsson) is making a strong showing of fighting into the Top 5. And in the bottom half of the Top 10, Motorola continues its slide and Huawei is growing strongly. LG and ZTE are keeping pace with the industry.

Source: TomiAhonen Consulting 2012This data may be freely used and repeated

Android continues to dominate, and nears the half-level of all smartphones sold. Apple's iOS took a solid second place and Symbian continues to crash. Blackberry held steady. In the small ranks we have bada the strongest outside the top 4. Windows Phone saw the first 600,000 phones sold by Nokia under its Lumia series in Q4 which turned the long decline of Windows Phone into a modest growth. Still, the brand new MeeGo from Nokia, even with its very limited launch availability almost tied all Windows Phone sales by all brands. I have Windows Phone at 1.8 million units and MeeGo at 1.75 million. Thus within Nokia, MeeGo and the N9 outsold all Microsoft Windows Phone based Lumia phones by.. 3 to 1. And Windows Mobile is doing its slow death. Again even the combined sales of both Microsoft platforms, Windows Mobile and Windows Phone did not match Samsung's bada sales.

ANDROID, WINDOWS PHONE MANUFACTURER SHARES

I have also been providing the market shares for the various operating systems that had more than one manufacturer, where it was 'relevant'. Recently the only OS worth monitoring was the Google Android OS family with Symbian shrinking to being mostly only Nokia and Windows Mobile shrinking overall to oblivion, but now that Nokia has launched its Lumia series, I will also give my measure of Windows Phone OS family market shares for Q4.

Source: TomiAhonen Consulting 2012This data may be freely used and repeated

These are approximate market shares, to fit the overall numbers as best as possible. I do not find any particularly 'glaring' problem with any of those numbers for this past quarter (sometimes some number does not seem to be right, these are reasonable).

GRADING FULL YEAR 2011 PERFORMANCE

So, we come to the end of 2011, in the Bloodbath it was Year 2, Electric Boogaloo. We expected carnage and intrigue but the year got even more of a roller-coaster ride when Nokia suddenly committed market share suicide with the Elop Effect (combining the Ratner Effect with the Osborne Effect). As I predicted when giving a preliminary analysis of what it would cause - Nokia's market share crashed - my first prediction on February 15, when I said Nokia would end in Q4 having 12% market share haha.

The Nokia give-away was a once-in-a-lifetime type of opportunity for the swift to capitalize, and move quickly, to steal market share. The fastest to take advantage were Samsung, Apple, ZTE and Huawei. Surprisingly the usually nimble HTC didn't manage to capitalize and RIM utterly failed in its chances, unfortunately putting all its attention to the tablet PC they launched which failed miserably in the market as well. But lets look at each brand now, and a quick analysis of how well they fared in the Electric Boogaloo. As usual, I will grade each contestant by the order of their finish starting from the biggest.

Apple had a monster year. Yes, its iPhone 4S was delayed by more than a quarter, but even then the 4 sold well and once the 4S came along, Apple had a phenomenal Christmas. More than half of Apple's income now comes from the iPhone and Apple generates easily most of the profits of the handset industry. Even while making only smartphones, Apple has crashed into the Top 3 biggest handset makers, ahead of LG and behind only Nokia and Samsung, all three of which of course make most of their phones as 'dumbphones'. What an achievement!

For Q4 Apple is doing even better, selling 24% of all smartphones sold on the planet, so Apple's trajectory is even stronger than its annual performance. And while Samsung was briefly the biggest smartphone manufacturer in Q3, Apple took back that title in Q4 - giving us a different leader in the smartphone race every Quarter of the year. Congratulations Apple, perfect year, I give you an A.

Samsung did the nearly impossible - it had an even better year than Apple in smartphones. Before you say 'but but' - remember, Apple only doubled its sales in smartphones, Samsung more than tripled its smartphone sales - all while also being very profitable. Samsung was briefly the biggest smartphone manufacturer in Q3, partly because the iPhone 4S was delayed, and now gave the lead back to Apple. But Sammy is growing far faster than Apple and is destined to run away with the smartphone crown for the full year 2012. The race will be close still in Q1 but from Q2 Samsung should be clear of Apple...

Samsung's Q4 was also strong growing well faster than the industry and holding 23% market share. Samsung sells most of its smartphones on the Android platform, but also sells on bada and Windows Phone (and is developing Tizen with Intel for the future). The Galaxy series is synonymous with industry tech leadership currently. I grade Samsung an A+

Nokia's Annus Horribilis was a self-induced wound. Not a wound. A self-induced serial crippling. Yes, a year of torture by the CEO. A year of water-boarding in fact. A year ago Nokia grew by 48% and made a proft. This year as the industry grew 62% Nokia sales crashed 23% and produced massive losses. Nokia's market share in 2010 was 34%. By Q4 it was just above 12%. Nokia had scared away 65% of its customer base in just one year! We witnessed the establishment of a world record in market share destruction - not only in telecoms but in all industries. Stephen Elop will go into the Business Hall of Shame as the all-time costliest CEO. The biggest loss ever, for a current market leader. Nokia was twice as big as Apple exactly one year ago. Today (based on Q4 sales) Apple is almost exactly twice as big as Nokia in smartphones. That is a total comprehensive collapse. Nokia was doing just fine through the middle of February of last year - had an excellent early year in China sales for example, as we saw from its Q1 results - but then from February 9, Nokia's CEO had his brain-freeze and insanity took over. I have chronicled enough of the carnage on this blog, suffice it to say that his Elop Effect and the year of lunacy caused total damages so severe, Nokia destroyed a Blackberry-sized slice of Nokia's business, and yes, the CEO's moronic actions caused 3.9 Billion dollars of damage to Nokia last year. So yes, for those who remember, Siemens died fast in dumbphones, as did Motorola. Palm died fast in smartphones, as did Windows Mobile. Those market share disasters were child's play compared to what Nokia did last year. That was epic. The biggest damage to any global leader ever. EVER. Any industry. ANY INDUSTRY. Not like New Coke, not like the BP oil spill, not like British Airways Terminal 5 fiasco, etc etc etc. The biggest damage to any company in any one year, EVER.

But yes, what of that wonderful promised 'third ecosystem' fantasy by delusion-boy Elop? There were some who thought Microsoft plus Nokia would be a sure winner. There were others who felt that partnership was a case of two turkeys who will not make an eagle. It was sheer speculation until we got to see the Lumia launch. The Nokia CEO had total control of the most important new phone series launch in Nokia's history. Elop could control every aspect of it, from the design of the phones, to where they would be marketed and offered to what carriers/networks, to the pricing, to the promotion. Total control of the launch of what Nokia branded the Lumia smartphones that run on Windows Phone. The previous comparison point was the launch of Nokia's previous new operating system based smartphones, the S^3 platform of Symbian with the flagship smartphone N8, one year ago for Q4. Those sold 4 million units. Just counting for the growth in the industry of 62% Nokia should have easily sold 6.4 million Lumia smartphones under any reasonably bright CEO, without the extra effort of the most important launch ever. And Nokia threw the biggest marketing push for this smartphone series, ever. And on top of that, Microsoft came in and threw hundreds of millions of dollars more in marketing support - including giving away free Xbox 360 videogaming consoles to buyers of the Lumia800 for example in the UK. How many sales did Nokia do of all Lumia phones in Q4? More than 6.4 million? No. Not even close. 600,000 is what Nokia managed. Literally they managed only one tenth the level they did a year ago (when adjusted for industry growth in the past year). That is utterly horrid performance and the signs were all there. The Lumia is not succeeding, and will not succeed. Anyone who hopes or thinks or expects that Lumia and Microsoft can rescue Nokia, has now facts - it will not. The Lumia launch is a total dud. And major analyst houses like Morgan Stanley see Nokia struggling far more this year, that market share of 12% will end at 8% according to Morgan Stanley's projection by the end of this year.

There is a ray of hope, it is called the N9 and MeeGo (And the N950 and other MeeGo devices either designed or otherwise MeeGo compatible like the N900). MeeGo outsold Lumia by 3 to 1 (more about MeeGo below). But Nokia's psycopathic CEO refuses to let the highly desirable N9 to be sold in Nokia's major markets - to the degree in Germany the biggest newsmagazine, Der Stern actually recommended to its readers to drive to Austria or Switzerland to go buy the N9 rather than Lumia smartphones. And bizarrely he refuses to sell the sister device, the N950 anywhere! Highly desirable 'hit' phones are very rare in this industry and Nokia dearly could use one right now. Only a fool as CEO refuses to sell a hot product globally. Only a fool. As long as Elop is in charge, Nokia is continuing its death-dance and has to sell its best assets just to survive. For the company that set the world record for market share destruction in a year, and going from big profits to huge losses, Nokia deserves the worst grade ever given. Unfortunately I can only fail Nokia and give it an F-

Blackberry maker RIM had a bad year. The Blackberry had grown market share every year up to 2009. Then their sales stalled, and Android (not the iPhone) started to eat into Blackberry's share. This year they were uniquely poised to steal most of Nokia's collapsing sales of its E-Series QWERTY based business-oriented smartphones. RIM should have had an easy time taking at least 6 million Nokia customers without batting an eyelash. And in a year of 62% growth, if RIM otherwise held steady for the year, they should have been in the scale of 84 million units of Blackberry sales. Yet they didn't. RIM launched its doomed tablet PC - which took the focus away from the management. RIM's strong profits vanished and in its panic, the co-CEO's fired tons of valuable sales and marketing (and design) staff which were needed right then to capture the slice of the Nokia customer give-away. And then the OS was delayed and Blackberry's troubles just compounded. No wonder the co-CEO's were both replaced by the end of the year.

In Q4 we see a rebound, strong sales on paper, but actually the growth in Blackberry sales from Q3 is only on par with the strong growth of the overall Christmas period Q4, so RIM actually only kept pace with the industry. However, as the previous two quarters had seen actual sales declines (not just market share declines), the turn-around was welcome and signals a possibly recovering RIM for 2012. Still, for their 2011 performance, I grade Research in Motion with a C+

Taiwanese HTC had a good year, inspite of the bad press. Their smartphone sales grew stronger than the industry, by 81% in fact - and HTC did report a profit every quarter. They issued a series of downgrades to their forecasts, which has been more the source of the bad press. But they outgrew the market in one of the most dynamic big industries ever seen, and they grabbed market share in a very topsy-turvy year. HTC sold smartphones on Android and both Windows based platforms.

In Q4 we see HTC stumbling quite badly and falling in market share down to 6%, so the current trend is perilous for HTC, even as it manages profits. So I find it a reasonable and kind of 'average' mid-fielder performance, I grade HTC at a C.

The long partnership saga of Sony and Ericsson was finally ended in 2011 and Ericsson exited the handset industry (focusing only on the infrastructure side of telecoms hardware). That leaves us a potentially far stronger Sony - consumer electronics powerhouse - and owner of a slew of consumer electronics brands led by PlayStation and a vast catalog of content from movies to music. Sony(Ericsson) grew sales strongly close to 3x in size, and took a lot of market share. The partnership was notoriously poor in profitability and slipped in and out of profits in the year. As Sony(Ericsson) shifted away from Symbian and Windows Mobile to focus on Android, with its Xperia series Sony became highly desirable. The company sells about 80% of all of its handsets now as smartphones and said it will complete the transition to 100% smartphones this year. That would make Sony the first legacy handset maker to achieve that major transformation of its business (and surviving it too, haha, many rivals like Siemens, Motorola and yes, Ericsson, didn't survive that transition).

For Q4 Sony grew a little slower than the industry so its market share gains are stalling, but still for the full year, I grade Sony at a B-

LG - 23 M sales, 5% market share, grew strongly but made losses - B-

LG seems to have had an almost identical performance as Sony. LG more than tripled its sales for the year, but like Sony, LG also was both in and out of profits in its handset unit. LG offers smartphones on Android and a few token Windows Phone units. The last quarter saw worse performance from LG with the company slipping in the standings. But as it did grow strongly and is borderline in profits/losses, I grade LG with a B-

Huawei is better known for its major business of telecoms networking infrastructure (like Ericsson and Alcatel-Lucent) than its handset unit, where its close sibling Chinese rival ZTE is more reversed, doing more in handsets than infrastructure. But in smartphones, Huawei has leaped ahead of ZTE and had a monster monster year. Huawei mainly offers Android based smartphones and usually at the low end of the price range. For Q4 they again grew faster than the industry. I find no fault in a perfect year for Huawei and grade them with a solid A

Motorola was bought by Google last year or more precisely, Google announced its intention to buy Moto, and they are now in the legal process to complete that deal. I will for now continue to call its Motorola unit as Motorola. So Moto-Moto, what have you done for me lately? Not much. Was yet another under-par year for the former giant known for the Razr. So how did it go in the Electric Boogaloo? Moto grew sales yes, but less than the rate of the industry, so they lost market share. Motorola had abandoned Symbian already a while back and also ended its use of Microsoft based operating systems, concentrating only on Android. They were 'thanked' by Microsoft with a lawsuit on patent infringements.. (Microsoft simply doesn't 'get it' that lawsuits in mobile will only make you more hated and the major players in this industry have very long memories). For Q4 Motorola continued its slide, growing less fast than the industry. So when you bleed market share, and do that unprofitably, that is bad business. I grade Motorola year 2011 at a D+

Just like its bigger brother Huawei, ZTE also grew enormously in 2011, more than 3x bigger. They made a profits. They only provide Android handsets. Their only minor blemish was that in Q4 they grew a little less fast than the industry overall while not enough to lose market share. That is why I grade them an A-

FUJITSU - out of Top 10 - F

Fujitsu promised they will re-enter the global market and did launch in some Asian markets. So far their record is poor for 2011 and they fell out of the Top 10. I score them an F

SHARP - out of Top 10 - F

Sharp had already started on their come-back to the world stage, but that had its series of stumbles and bumps (they were the manufacturer of Microsoft's Kin series, a pair of youth phones that established a world record for new launch and market removal of 6 weeks in 2010). As they made some Android based moves to some markets around the world, their sales did not keep them in the Top 10. I grade them an F

OPERATING SYSTEMS ANALYSIS

Now lets do the operating systems. Two died in 2011 (Palm Web/OS by Hewlett Packard and LiMo by the Linux Foundation). Two more had their deaths announced (Symbian and MeeGo). One new OS launched (MeeGo). Two more were announced (Tizen and Meltemi). And Android continued to roll as the huge steamroller of the OS wars while Microsoft Windows Phone - then the 8th ecosystem - convinced Nokia to join in the propaganda to promote the Windows Phone as supposedly the 'Third Ecosystem' haha. What a laugh. But like with the phones, lets do these in size from biggest to smallest.

ANDROID - 208 M units, 43% market share - grew explosively - Grade A

Google's Android is now three years of age and it has taken the world's most competitive global industry ever, and is on the brink of having captured half of it (some analyst houses have jumped the gun and claim Android is already past 50% in smartphones in Q4 but Google's own activation numbers do not support that view). Android grew almost 4-fold in 2011 from 54 million to 208 million units per year. Android features smartphones made by Samsung, HTC, Sony, LG, Huawei, Motorola (Google) and ZTE out of the Top 10 plus many smarpthones outside the Top 10 like Fujitsu, Sharp, Mi-Fone, etc. In Q4 the sales growth slowed a bit but was still well faster than the industry growth rate. All in all, perfect year for Android. I grade them an A

iOS - 93 M units, 19% share - grew strongly - Grade A-

Apple's iOS grew very strongly in 2011, nearly doubling in size and taking a lot of market share. Not much more to report. Sold only on Apple iPhones in the smartphone races (plus some other Apple products). The Q4 was a stellar quarter but Q3 was under-par due to the late launch of the iPhone 4S. Still a near perfect year for the iOS platform, I grade it an A-

SYMBIAN - 81 M units, 17% market share - collapsed - Grade F

What can I say? Symbian towered over its rivals a year ago Now its a shadow of what it was and while Nokia's delusional CEO Stephen Elop first promised Nokia would produce another 150 million more Symbian smarphones when he said Nokia would transition to Microsoft - and most analysts said that was a ludicrous pipe-dream - today Elop has admitted it was a futile attempt and has reneged on that promise. If I was a Nokia app developer partner, I could not imagine a more disasterous year from Nokia, from abandoning the replacement platform MeeGo and the promised migration path to it via Qt, to badmouthing Symbian and the ecosystem, to unbranding the Ovi store, to shifting Nokia handset production to outsourced Taiwanese Compal, to switching away from Nokia staple components, to abandoning Nokia standard (and industry-leading) features - to now turning back on the solid promise of 150 million more Symbian devices. Yes, only a year ago, in January 2011, Nokia's Ovi had become the world's second biggest app store by downloads - and was rapidly catching up to Apple. Now all that is wasted..

So yes, while the industry grew 62%, Symbian saw sales crash by 31%. The last Symbian partners were solidly committed for big sales of Symbian, in particular in Japan, and very importantly NTT DoCoMo the biggest carrier/operator of Japan, but that all died in February of last year with the dual death-nails of the Elop Effect. By Q4 Symbian's death-spiral is only accelerating - with now the third straight decline of Symbian sales. Not decline of market share, but true decline of sales. This from a platform so strong, it grew 44% just the year before. If you lose actual sales in a year when the industry grows 62% - then you have failed and I grade Symbian an F

BLACKBERRY - 52 M units, 11% market share - anemic growth - C-

Blackberry did grow, but barely for the year. RIM is the only manufacturer making Blackberry compatible smarpthones (but interestingly and perhaps ironically, they are migrating to be compatible with Nokia's Qt developer tools - the ones that Nokia itself is now moving away from as Qt is compatible with Symbian and with MeeGo but not with Windows Phone). For Q4 they had a little bit of a come-back but only still grew at the pace of the industry, not more. Thus for the year I grade the Blackberry OS with a C-

bada - 9 M sales, 2% market share - massive growth - A-

Samsung's bada is the biggest and best-growing of the three new operating systems, and where Microsoft sells the fantasy of Windows Phone being somehow a 'third' ecosystem, in reality bada is very legitimately now the 5th ecosystem. bada only powers Samsung based smartphones and Samsung stepped into the place vacated by Nokia with the MeeGo partnership, to join Intel to develop Tizen as the next open source based smartphone OS to power not just Samsung but many other brand smartphones. Note that the comparison between 2011 and 2010 data is not comparable, because bada launched in the last quarter of 2010, so the right comparison is only Q4 of 2011 to Q4 of 2010 where the growth was 3.5x ie truly massive. bada grew ever consecutive quarter and once again in Q4 it grew faster than the industry. This is excellent for a new OS platform - I grade bada at A-

Note just like bada, Windows Phone data cannot be compared directly between 2011 and 2010, because Windows Phone launched at the end of 2010 so the sales number is not for full year 2010 but only Q4 of 2010. And when we compare Q4 2011 to Q4 2010, Microsoft's brand new Windows Phone OS sales have.. yes.. declined. In Q4 of 2010, Microsoft's Windows Phone shipped 2 million units (most of which were free early trial smarphones) By Q4 of 2011, Windows Phone sold only 1.8 million units which included the launch of Nokia and its Lumia smartphones, which accounted for 600,000 out of the Windows Phone totals or exactly one third. The others came mostly from HTC and Samsung. Note that Windows Phone lost unit sales for three quarters straight, Q1, Q2 and Q3 and then Microsoft CEO Steve Ballmer fired the Windows Phone President (sorry, no he was not fired, he was demoted). Ballmer himself expressed frustration time and again in 2011 how Windows Phone sales were declining and disappointing. In Microsoft's best market, the USA, even in Q4 the older and obsolete (and incompatible) Windows Mobile OS still outsold Windows Phone! And Microsoft started to hide the true division by making a big marketing PR push to call now all Windows Mobile smartphones also Windows Phone (which they obviously are not) and each of the big 4 analyst houses have stopped separating the two OS platforms, calling it simply Microsoft. The performance of Windows Phone is dismal and I grade it at D+

WINDOWS MOBILE - 5M sales, 1% market share - declined sales - C-

Yes, Windows Mobile did decline more than Windows Phone - but Windows Mobile was announced dead more than two years ago, and it simply refuses to die. Like I said, in the USA, Microsoft's best market, it still stubbornly outsells Windows Phone in Q4 of 2011. For the full year, Windows Phone lost almost two thirds of its sales and its market share fell into the toilet from 4% to 1%. But it just refuses to go away, to Microsoft's great dismay. Yes its about to vanish and yes it fell massively, but I salute the attitude of refusing to go quietly, and I give that spunkiness a bit of respect and grade good ole WinMo with C-

MEEGO - 2M sales, 0% market share - new launch OS first quarter - B+

The newest and hottest of the three new operating systems, MeeGo by Nokia and Intel, is also already a dead-man-walking. In a bizarre decision by the delusional Nokia CEO, Stephen Elop, he announced in the summer, that even if the sales of the N9 - the first MeeGo handset - were exceptionally good - he would not authorize any more MeeGo devices to be made by Nokia (beyond the N9 and its sister N950 which was already announced). So Nokia took all the trouble to create a fully functional touch-screen optimized smartphone OS, which by all reviews is excellent - and which is open source, Linux based, and compatible with Qt, Nokia's developer tools - and which does not cost one cent to Nokia to use in any handsets - and which works on Nokia's standard components and can be manufactured in Nokia's mostly idling massive factories (so badly idling, Nokia has already been forced to shut down and/or sell 3 of them just because of the collapse of Nokia sales last year). And then Nokia announce it will replace MeeGo with Windows Phone, which is not open source, is not Linux based, is not compatible with Qt, and for which Nokia has to pay a license to Microsoft for every handset ever sold, which does not work with Nokia standard components, and at least the first Lumia phones were made in Taiwanese factories of Compal, not in Nokia's own (idling) factories. And this OS, MeeGo, the CEO says he won't ever use again? What is wrong with him? I can see if the alternate was 'not open' or 'expensive to use ie needs a royalty payment' or 'not compatible with Nokia's tools' but where MeeGo is in every way better than Windows Phone - I didn't even mention how many ways Windows Phone is not compatible with Nokia standard features and functions (but MeeGo of course is)..

So, we have an excellent launch Quarter for Nokia's MeeGo - a launch which was totally abandoned by the CEO who spent all the money on the Lumia Windows Phone launch (simultaneously). The N9 was the only handset sold (bizarrely, the N950 also on MeeGo is manufactured yes, but in tiny numbers. Mad!) and the N9 is only sold in obscure or tiny countries. Like New Zealand or Nigeria or Kazakhstan - no offense to my friends in any of those countries haha.. MeeGo did about 1.75 million units of sales - three times as many as the two Lumia smartphones in the same Quarter - and the one handset N9 alone almost matched all Windows Phone smartphones made by HTC, Nokia, Samsung and the other Windows Phone partners in Q4, which were obviously sold in most of the biggest smartphone countries and definitely the most affluent countries. Considering that Nokia gave it no support and deliberately prevented the N9 from being sold in any major countries - I mentioned the German magazine actually telling readers to drive to another country to buy it, that it is so good - I grade 1.75 million sales - and a 1% market share for its launch quarter a good performance at B+

PALM WEB/OS - terminated in 2011 - F

Hewlett-Packard bought Palm when its Web/OS and the latest Palm smartphones were rated second best on many tech sites behind only the iPhone. HP could have 'easily' turned its Palm asset into what the iPhone is to Apple - to deliver half of sales and most of profits - and help push the company to the top of the most profitable companies on the planet - as the Palm purchase was optimally timed if HP - already a maker of smartphones - wanted to capitalize on the massive smartphone industry expansion. It utterly failed, rather than using the existing Palm devices and rebadging them with HP and rapidly flooding the market with a hot smartphone - instead HP decided that a smartphone is a pocket PC and tried to make a business tool out of its Palm unit. That silly adventure ended last year when the Palm Web/OS unit was turned into an open source project. Palm is for all practical purposes dead now. Hence, if you die in the year that the industry grew by 62% - you failed. Miserably. I grade Hewlett-Packard's Palm misadventure as an F

For those interested to quote these numbers - you may fully use any analysis, and any numbers - and the tables - freely. I ask you list as your source if it is a printed document like book, article or white paper or infographic or for example powerpoint slide etc - please list source: TomiAhonen Almanac 2012. If you quote info from here on a website or blog or Facebook, Twitter etc mentions, please include web link to this page. I have also created an easy short permalink on Tinyurl for you to copy-and-paste if you prefer to this page, which is:

http://tinyurl.com/FoneStats

Also note, you may freely recreate the above tables into better form, including any diagrams and graphs if you like as long as you mention the source.

IF YOU WANT MORE INFO

I have published the TomiAhonen Phone Book 2010 about the mobile phone handset industry statistics and data up to the end of year 2010. It has 98 tables and charts about the handset industry, including cameraphone resolutions, browsers, bluetooth, 3G, etc and regional data and user data and all sorts of facts. It is only available as an eBook with pages formated for the small screens of smartphones, so you can carry the pdf file with you to have the stats everywhere. The Phone Book costs only 9.99 Euros so it won't damage your budget. See more at this link TomiAhonen Phone Book 2010.

If you like this information about smartphones but are more interested in the overall mobile telecoms industry from data services to subcribers to revenues to advertising to consumers etc, I publish an annual statistical volume, called the TomiAhonen Almanac with 94 tables and charts. It has of course one chapter on handsets and the above data in this blog article is part of that chapter. The current edition is from year 2011 but I am about to release the 2012 edition within literally days from now with all data current to January 2012. So if you buy the 2011 edition today as we are less than one month from the next edition, I will actually deliver to you both, so that 2011 edition immediately, and the new 2012 edition when it is released, for the same low price of 9.99 Euros. Please do not buy the wrong eBook, as they have some overlap! See more including table of contents at TomiAhonen Almanac 2011.

February 13, 2012

Honestly, I do NOT want to make this blog only about Nokia and its madman CEO Stephen Elop. But the story took such a bizarre twist today, I HAVE to comment on it.

Remember the Star Trek (original series) episode where Captain Kirk returned to the Starship Enterprise on the transporter, to find himself in a parallel universe where his staff is evil and sadistic, Spock had a beard etc. The episode was called Mirror Mirror. Anyway, Kirk had to think real fast to adjust his behavior, so that his evil crew in that alternate universe did not notice that they had accidentally received a 'kind' Captain Kirk rather than their evil one..

That is the kind of utter total twisted sense of reality we now face. The definition of delusion says that the person will look at overwhelming facts to the contrary, and still hold onto a false image of reality. So I ask you, our readers, is this not delusion in Nokia CEO Stephen Elop? He was interviewed in South Africa by the daily financial newspaper, Business Day. And Elop said that Nokia was no longer on a burning platform.

On November 9, 2011, one year ago, a few days after Nokia's latest quarterly results were released, we found out the following: Nokia's smartphone unit sales had grown 48% in the previous year. Nokia sold literally more than one out of every 3 smartphones on the planet. Nokia's total smartphone sales were more than twice as big as its nearest rival (RIM) and Nokia also sold well more than twice as many smartphones as Apple sold iPhones. Nokia corporation revenues and profits had grown, and the driver of Nokia revenue and profit growth was the smartphones unit. Nokia had by far the biggest market share in the world of smartphones, selling the most smartphones on five out of the six inhabited continents: Europe, Asia, Africa, Oceania and Latin America - only in North America was Nokia not the bestselling smartphone. Nokia was so dominant in China, the world's biggest smartphone market country, that Nokia's market share was 76% and Nokia was by far the most desirable smartphone brand.

Elop lectures us about the future of the smartphone wars being won by 'ecosystems' rather than handsets alone. Nokia's ecosystem was by far the biggest by installed base, by developers, by new sales of handsets, by carriers/operators covered, by language support etc. By downloads, Nokia's Ovi store was second, to Apple's iPhone App Store but closing the gap. Nokia's migration from dumbphones to smartphones was well ahead of the global level at 25% vs 22%. Those smartphones that accounted for 25% of Nokia's total handset sales, generated 34% of Nokia's revenues and nearly half of Nokia's profits. In the first five months that Elop had been in charge, the Nokia share price had gained 11% - a very strong growth level well ahead of the global economy or the telecoms market overall for the same period.

And into that context, Nokia had just in Q4 of 2010 launched a new operating system version, called S^3 for Symbian, which had set a Nokia record for most new sales in the first quarter, of 4 million units, led by the N8, a flagship touch screen smartphone that won numerous awards as the best phone of the year.

This is what Nokia CEO Stephen Elop calls a total Nokia corporate disaster so bad, he says it is a 'Burning Platform'

Now today, one year later. Nokia has released its latest quarterly data which tell us that Nokia overall smartphone sales have collapsed, they fell 31% from this time a year ago - while the global smartphone industry grew by 63%. Nokia's market share has crashed from 33% to 12%. Where just a year ago Nokia smartphones alone were more than twice as big in unit sales as all iPhones, now Apple's iPhones are almost exactly twice as big as all of Nokia's smartphones. Nokia has not just fallen behind Apple, it has also fallen behind Samsung in smartphones. Nokia corporation now generates a loss, which is driven by the biggest loss-performing unit of Nokia... its smartphones unit! This while Apple, Samsung etc all find smartphones the most lucrative part of their corporations - as Nokia did itself just a year ago. The smartphone unit now drives Nokia's losses! Nokia has retreated now from market leadership positions and is no longer the biggest on four out of the six continents, having lost the leadership in Europe, Latin America and Oceania (as well as North America) and only leading in Asia and Africa. In China Nokia's market share is crashing, with only 18% of Chinese now even wanting to buy a Nokia branded smartphone.

In ecosystems Nokia has terminated the migration path for its developers - which angered the developers. Nokia has sold its advertising unit. Nokia broke its promise of another 150 million more Symbian devices. Nokia has rebranded (or unbranded) its app store. Nokia has switched from the biggest ecosystem that it controlled, which was based on open principles, for the smallest of 8 mobile ecosystems, Microsoft's disasterous Windows Phone, which is shrinking in size, where Nokia is slave to Microsoft, has to pay Microsoft a license, and a system which itself is not based on open principles. Where Nokia's own ecosystem was growing by 48% a year ago, the Microsoft Windows Phone ecosystem has been shrinking the past year, and was last measured at less than 1% in reach. Nokia's migration from dumbphones to smartphones has been reversed, now Nokia lags the industry which is at the point of 33% of all new phones sold being smartphones, but Nokia has regressed where only 17% of its new phones are smartphones. The smartphones account for a minor fraction of Nokia revenues anymore and yes, generated a huge loss to the corporation. In the past 12 months since the Burning Platforms memo, Nokia's share price has fallen by 55%.

In the past quarter, Nokia launched its new Lumia smartphones on the new Windows Phone operating system in the most expensive and massive marketing launch of any new smartphones ever. Using all that Nokia marketing could do, Nokia then had hundreds of millions of dollars of Microsoft's marketing money to boost that - including giving away free Xbox 360 gaming consoles for those who bought Lumia smatphones. Yet the new flagship Lumia 800 and its sibling the Lumia 710 did not sell more than 600,000 units in Q4 (passing 1 million sales when counting the added sales of January). The Lumia launch is probably the weakest Nokia flagship launch in history and the Lumia 800 did not win any significant awards - it is so despised, some like the UK newspaper the Guardian who used it are already returning it and others like the Germany newsmagazine Der Stern suggest Nokia fans should drive to another country to buy another Nokia new smartphone called the N9 running the MeeGo operating system - that is not even sold in Germany, rather than this lousy Lumia on the failing Windows Phone - that is how disliked Lumia is. Meanwhile analysts like Morgan Stanley project further crash of Nokia market share even with Lumia to fall from 12% today to 8% a year from now. All ratings agencies have repeatedly downgraded Nokia and its prospects.

And this today, is Nokia's situation that CEO Stephen Elop says is 'not a burning platform' anymore. That Nokia's future is 'secure'. And yes, after Samsung sold nearly twice as many smartphones - very profitably - than Nokia in Q4 - and is now poised to pass Nokia as the world's biggest overall handset maker this Spring - Nokia's CEO says he is not losing sleep over Samsung.

Is it just me? Is this not an alternate universe? If your product is utterly dominating its rivals, growing massively, and making huge profits, that propel your company share price to jump - when ALL the numbers and trends are good - that is a platform on fire? But when your product is failing in the market place, dwarfed by your rivals, losing massively, making huge losses, that propels your share price to collapse - when literally on every measure the good has been reversed to bad - that is a platform today somehow suddenly 'not on fire'?

He is not just an incompetent CEO - he is looking at the facts, and making absolutely opposite conclusions to the reality. Elop is truly delusional. He is destroying Nokia due to his deliberate wanton disregard of the facts. Elop must be fired now!

An invitation to come and read No Straight Lines: making sense of our non-linear world as an open access participatory book.

It looks at how we can build better more sustainable societies, organisations and vibrant economies through innovative practice.

It argues we need to design and create for the needs of humanity not industrial systems. You can read the entire book (open access) by clicking on READ THE BROWSER BOOK link on the No Straight Lines webpage

There is an entire chapter devoted to mobile.

I explore mobile from the perspective of what it can do at an organisational and at a societal level.

From the Achuar tribe in the Amazon rainforest using mobile and GPS enable digital technologies to challenge the Peruvian government and the mining companies trying to exploit their habitat and way of life to children using iPhones at school for learning in new exploratory ways - I make the point that mobile plays an important role in the evolution of every aspect of our society.

So NSL looks at education from Africa and India to the western world, it looks at how bricks and mortor organisations can become platforms and become part of a global economy, we look at how people living on $2 a day could be doubling their daily income by working on their mobile phones – we look at the politcal consequences of rapidly shared knowledge and information, we look at data and the impact on how commerce per se will evolve enabled by mobile. And we celebrate organisations like Ushahidi that are showing us the way in how innovation really works. In Japan we look at ground breaking business models that are already nearly 10 years old and we wonder why the fashion industry is not fully up to speed, nor indeed the media industries either.

I also argue that if organisations are not able to really design with mobile they could be missing a significant opportunity.

Here is a sample of the introduction.

Gutenberg is a moblogger: economic, organisational and societal transformation through mobile communications

There is another aspect of our non-linear world which plays an important role in what comes next. We are inevitably moving towards a society where our mobile devices become the remote control for our daily lives. Any technology that allows us to better connect, communicate, share knowledge and information and get stuff done will be widely adopted.[1] Some of the stories already presented suggest the changes to people’s lives big and small that mobile communications will usher in.

We are but at the beginning of our journey of transformation which will take some time, generations even, to play out. Vint Cerf, one of the founders of the world wide web, has a view that much has already been achieved to create a better world: ‘It has provided access to information on a scale never before imaginable, lowered the barriers to creative expression, challenged old business models and enabled new ones.’ He continues: ‘It has succeeded because we designed it to be both flexible and open. These features have allowed it to accommodate innovation without massive changes to its infrastructure.’[1]

Gutenberg is a moblogger

When discussing or teaching disruption, I ask the question whether the church ever saw Gutenberg coming. The church was a powerful monopoly controlling all before it did so by ensuring that knowledge, the protein for innovation and creativity, was safely kept out of the hands of feudal man and woman. Power was knowledge, and knowledge could only ever be accessed by joining the church. Gutenberg, busy in his garret in Mainz, had no idea what he was unleashing upon the world, yet were Gutenberg to be alive today, he would be creating technology so that he could be taking pictures and shooting videos with his mobile; he would be blogging and vlogging via his mobile, paying for his car parking spaces via his mobile, getting his library books renewed via SMS, dating on Flirtomatic and getting his healthcare from the 3G Doctor. When technology becomes successful, it becomes ubiquitously invisible and so our mobile devices become our personalised remote controls for life.

The numbers of mobile devices in the world, currently some 5 billion, with 80% of the world’s population living within range of a mobile network, including the Masai and the Bedouin, is extraordinary. Never in the history of the human race have so many people been able to connect to each other – the scale is simply unprecedented. In developing economies, people are finding innovative ways to use mobile technology. Grameen's microfinance and village phone programmes in Bangladesh and elsewhere are known and respected around the world, but there are many less famous examples. During the Kenyan elections, Mobile Planet provided its subscribers with up-to-the-minute results by text message. And in his Presidential election campaign, Barack Obama did not miss the opportunity to mobilise his supporter network through mobile connectivity. Writing in the Observer, Cerf states: ‘As the cost of mobile technologies fall, the opportunities for such innovation will continue to grow. We're nearing the tipping point for mobile computing to deliver timely, geographically and socially relevant information.’ He goes on to comment on how researchers in Japan have proposed using data from vehicles' windscreen wipers and embedded GPS receivers to track the movement of weather systems through towns and cities with a precision never before possible. ‘It may seem academic’, he adds, ‘but understanding the way severe weather, such as a typhoon, moves through a city could save lives. Further exploration can shed light on demographic, intellectual and epidemiological phenomena, to name just a few areas.’

[1] Vint Cerf, ‘If you thought the internet was cool, wait until it goes space age’,Observer, Sunday, 17 August 2008.

[1] McGuire’s Law: the utility of any activity increases with its mobility. http://mcguireslaw.com/.

February 10, 2012

We are now at the one-year anniversary of the notorious Burning Platforms memo, with which Nokia CEO Stephen Elop single-handedly destroyed Nokia's dominant market position in smartphones and caused 13.8 Billion dollars of destruction in Nokia handset annual revenues, and wiped out 4.4 Billion dollars of annual profits from Nokia corporation. The damage in Nokia's future, the smartphone division is even worse- Elop's memo wiped out 13.8 Billion dollars of annual sales and 3.9 Billion dollars of annual profits in just one year. Before the memo, Nokia just in smartphones was more than twice as big as Apple's iPhone. Today it is the opposite, the iPhone is twice the size of all Nokia smartphones. By crashing Nokia's smartphone market share, Nokia dumbphone market share, Nokia corporate revenues, Nokia average prices, Nokia corporate profits, Nokia share price, Nokia credit ratings, and the Nokia brand value, the Burning Platforms memo is the most damaging single management communication of all time. A year ago there were some (usually quite misguided tech experts who didn't understand mobile) who actually applauded Elop for this moronic memo.

(UPDATE 13 February - Please note I have added a brief comment to the end of this article, based on Elop's interview given in South Africa about specifically the Burning Platfoms memo. It gets beyond weird..)

At its anniversary, now is a good time to set the Burning Platforms memo into the proper context of reality and facts. To see just how idiotic it was. Because the memo was so error-laden, misguided and most bizarrely, even where Elop was right, his actions since have been against the 'sensible' parts of the memo, I have to do this blog properly. This is a long article, some 12,000 words. Take a cup of coffee before you start. This would be the length of a whole chapter in one of my books. But lets examine the Truth, the Whole Truth and Nothing But the Burning Platforms memo.

The Burning Platforms memo can be read at several locations including the Wall Street Journal. I have reproduced the memo here verbatim (in italics), but added my 'translation' from a Rumsfeld-Cheney'an deliberate distortion of reality by Elop, to the more commonly accepted definitions of 'facts' and 'reality' by the rest of the world that was not serving the George W Bush government.

THE TRANSLATION

Burning Platform Memo

(ie the Nokia destruction manual)

There is a pertinent story about a man who was working on an oil platform in the North Sea. He woke up one night from a loud explosion, which suddenly set his entire oil platform on fire.

(Note the 'sudden' explosion - this was not a gradual challenge by the rivals of Nokia like Apple for the past four years or Google's Android the previous two years: no. This all happened quite unexpectedly in February 2011, when suddenly the Nokia CEO Stephen Elop had set the world's biggest smartphone platforms on fire like a true arsonist)

In mere moments, he was surrounded by flames.

(in merely one full quarter after he started the fire, he found that Nokia smartphones had already lost half of their market share)

Through the smoke and heat, he barely made his way out of the chaos to the platform’s edge. When he looked down over the edge, all he could see were the dark, cold, foreboding Atlantic waters.

(there had been a strong other platform at Nokia called MeeGo, but Elop had set it also on fire, this is why the man could not see anything except the Atlantic)

As the fire approached him, the man had mere seconds to react. He could stand on the platform, and inevitably be consumed by the burning flames. Or, he could plunge 30 meters in to the freezing waters. The man was standing upon a “burning platform,” and he needed to make a choice. He decided to jump.

(the decision was 'encouraged' by Elop who fired more than 10,000 Nokians that had refused to jump, and then in upcoming months, fired many thousands more. He has fired 30,000 Nokians by now)

It was unexpected.

(because it was 100% unnecessary, and a totally self-induced injury by the CEO)

In ordinary circumstances, the man would never consider plunging into icy waters.

(because under normal circumstances any sane CEO makes decisions that are good for the company, not detrimental to the company and its employees)

But these were not ordinary times

(as Nokia had clearly been taken over by someone, who based on this mad Memo was called a 'delusional psycopath' by the most influential expert of the mobile industry, the most published author of the mobile industry who lectures on mobile at Oxford University and whose words are so trusted he is referenced in 120 books by other experts. Nokia's own staff were aghast as were almost all reputable experts of the mobile industry)

– his platform was on fire. The man survived the fall and the waters. After he was rescued, he noted that a “burning platform” caused a radical change in his behaviour. We too, are standing on a “burning platform,” and we must decide how we are going to change our behaviour. Over the past few months, I’ve shared with you what I’ve heard from our shareholders,

(who have loved the way Nokia's new CEO Elop had grown Nokia share price by 11% in the first five months he was in office, while Nokia's perilous decline in profits was reversed to strong growth, and Nokia's smartphone saless were now growing strongly. They did not need any change to Nokia's strategy. But after this memo, Nokia share price has fallen more than 55%)

operators

(who appreciated how much Nokia had invested in Symbian to modernize it, and how Nokia had gone out of its way to let the operators/carriers join in the Ovi store ecosystem with Symbian and did not want Nokia to abandon Symbian for the hated Microsoft OS; and Nokia's upcoming MeeGo ecosystem had achieved the ultimate prize - the world's biggest mobile operator/carrier China Mobile had signed up to MeeGo - China Mobile alone is more than twice the size of all USA carriers/operators added together)

developers

(who loved the fact that Nokia had invested in a migration path for the 400,000 strong Nokia developer community - by far the biggest in the industry, carefully nurtured and developed over the previous ten years - to migrate their apps from Symbian via Qt to MeeGo and S40)

suppliers

(who were having steady growth in their business supplying Nokia with components but are now reporting quarter after quarter of failing performance)

and from you

(Nokia employees who believed passionately in creating highly loved high quality handsets in every price segment, from the affluent markets of the West to the low-cost handset markets to the Emerging World)

Today, I’m going to share what I’ve learned and what I have come to believe. I have learned that we are standing on a burning platform.

(which means I am either insane, or I have a hearing disorder)

And, we have more than one explosion – we have multiple points of scorching heat that are fuelling a blazing fire around us.

(because the CEO Elop has set those multiple explosions himself not only setting fire to Symbian, but also to MeeGo, to the Ovi Store, to Nokia's Qt developer tools environment, to Nokia's cloud computing solutions and Nokia's services such as Navteq and its mobile advertising)

For example, there is intense heat coming from our competitors, more rapidly than we ever expected.

(actually the competition was not providing intense heat to Nokia, it was destoying weaker rivals like Palm, Motorola and Windows Mobile. Nokia was experiencing only modest market pressure and actually was growing smartphone unit sales, revenues and profits; and its Ovi store had overtaken all other rival app stores except Apple's and was now closing the gap to that)

Apple disrupted the market by redefining the smartphone and attracting developers to a closed, but very powerful ecosystem.

(which is why Nokia had long before Apple built its ecosystem on the principle of an open ecosystem with its partners, with several times more developers, an installed base 8 times larger than that of Apple, and current sales of smartphones more than twice the size of Apple)

In 2008, Apple’s market share in the $300+ price range was 25 percent;

(which is why Elop acted in 2011 so detrimentally to Nokia, that today Apple's market is not just 25% of premium smartphones, it is literally 25% of all smartphones just one year later)

by 2010 it escalated to 61 percent.

(this growth rate for Apple was fast yes, but Nokia itself had also a good growth rate of 48% year over year while some rivals like Palm and Motorola were declining - and Nokia's growth rate was speeding up at the end of the year, not slowing down, so you'd think the CEO was happy things were not just good, they were improving at Nokia)

They are enjoying a tremendous growth trajectory with a 78 percent earnings growth year over year in Q4 2010.

(Nokia's own growth rate was far better - on a completely different level in Q4, with profits in Nokia's smartphone unit jumping 65% in just 3 months from Q3 to Q4 of 2010 under Elop's leadership! If compounded for the full year to be comparable to Apple, what Elop had was an annual growth rate of his smartphone unit profits of 741% !!!! - Almost 10 times stronger growth in profits at Nokia's smartphone unit than Apple !)

Apple demonstrated that if designed well, consumers would buy a high-priced phone with a great experience

(which was exactly why when Nokia designed its own touch-screen phones well, like the N8, Nokia too found that consumers buying the high-priced phone with great experience - still one year later, that N8 is still a top seller in many markets such as China)

and developers would build applications.

(just like Nokia's own developers who had developed apps for the Ovi store that was now the second best-selling app store in the world, and the Ovi Store was the bestselling app store in every country where the native language was not English, Japanese or Korean, and Ovi was now closing the gap to Apple)

They changed the game, and today, Apple owns the high-end range.

(which obviously was utter poppycock. Only after Elop destroyed Nokia premium smartphone sales in 2011, did Apple gain much of the high-end range, and even then it shares it with Samsung, HTC, SonyEricsson etc.)

And then, there is Android.

(Android the open source, Linux based smartphone platform that is supported by Nokia's Qt application developer tools - just like Nokia's MeeGo smartphone platform which also is open source, Linux based and supported by Nokia's Qt developer tools - but unlike Microsoft's Windows Phone which is a closed system and needs proprietary development tools)

In about two years, Android created a platform that attracts application developers, service providers and hardware manufacturers. Android came in at the high-end, they are now winning the mid-range, and quickly they are going downstream to phones under €100.

(so Android is following Nokia whose Symbian smartphones were already selling in the sub 100 Euro market and Symbian was far more capable to function on low-cost, low-specification handsets)

Google has become a gravitational force, drawing much of the industry’s innovation to its core. Let’s not forget about the low-end price range. In 2008, MediaTek supplied complete reference designs for phone chipsets, which enabled manufacturers in the Shenzhen region of China to produce phones at an unbelievable pace.

(meanwhile Nokia had not only the world's largest mobile phone factory also in China, but Nokia had more highly effective mobile phone factories much closer to its customers, from India to Brazil)

By some accounts, this ecosystem now produces more than one third of the phones sold globally

(whereas the reality is that this Chinese Shenzhen based 'ecosystem' produced more than two thirds of all the phones sold globally - facts very widely available - and Nokia itself was a major part of it so this is known very well inside Nokia. Where was Elop getting his 'facts'?)

– taking share from us in emerging markets. While competitors poured flames on our market share

(The competitor who poured flames on 'our market share' was of course Nokia CEO Stephen Elop himself, who compounded this idiotic memo with the partnership announced with Microsoft when he had no phones to show and thus crashing Nokia sales, and then not supporting the MeeGo handsets N9 and N950 to start even more fires to Nokia platforms)

what happened at Nokia? We fell behind

(by "falling behind", Nokia was twice as big as its nearest rival in smartphones and far bigger than its nearest two rivals, added together. Boeing or Toyota or Sony or Coca Cola would love to "fall behind" this badly and be literally more than twice as big as the nearest rival)

we missed big trends

(by "missing trends" Nokia had a touch screen phone before the iPhone, QWERTY phones before the Blackberry, an app store before Apple's iPhone App Store, 3G before either Apple or RIM made 3G phones, and currently Nokia already sells NFC Near Field based phones to enable mobile commerce, Dual SIM phones, etc. Nokia has not missed any trends. Not big trends, not even medium trends like forward-facing cameras, multitasking, folder views, Xenon flashes etc. Nokia has yes, sometimes executed poorly its first version of a given new trend, but Nokia has not missed any 'big trend' in mobile phone handsets, ever. Not one!)

and we lost time. At that time, we thought we were making the right decisions

(which of course means here on Planet Earth where people deal with reality, that Nokia was making the right decisions - app stores, touch screens, full internet HTML browsers, multitasking, front-facing second cameras, NFC, dual SIM, etc - all were right decisions, sometimes they were executed poorly or with severe delays, but the decisions were all the right calls)

but, with the benefit of hindsight, we now find ourselves years behind.

(by "finding ourselves years behind", of course Nokia was years ahead. So much so, that later in 2011, Apple settled its lawsuit with Nokia and had to pay Nokia royalties for stealing Nokia inventions for years past for treading on numerous Nokia patents, and pays currently for every iPhone made, while Nokia does not pay Apple a single cent. Similarly while Apple and Microsoft sue Samsung, Motorola and other Google Android partners, Nokia is not due any patent violations to Microsoft, Samsung, Motorola or anyone else)

The first iPhone shipped in 2007, and we still don’t have a product that is close to their experience.

(in fact 'first iPhone' was so deficient, that Apple spent the next three years making 15 major revisions to it, fixing its bugs, upgrading its hardware, operating system and software - where 14 out of those 15 upgrades and changes - that were celebrated by Apple as its biggest innovations in the official Apple press releases announcing the iPhone 3G, iPhone 3GS, iPhone 4 and their related iOS software updates - were all already deployed on Nokia's top smartphones before the first iPhone shipped in 2007. Yes, when Elop sais 'we still don't have a product close to their experience - that may be how President of the Moon Colony Newt Gingrich speaks, when normal people here on Planet Earth will actually look at the data and find that up to 2011, Apple hadn't yet caught up to Nokia smartphones from four years before.)

Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable.

(Unbelievable indeed, because it was not true in February 2011. Only one analyst house, Canalys claimed this bizarre 'fact' and their published numbers illustrated blatantly a huge math error obvious to the naked eye. Even the other major industry analysts mocked Canalys for the massive math error it made in its market share calculation)

We have some brilliant sources of innovation inside Nokia

(brilliant innovation which Elop has tried to stifle, like the highly praised swipe technology of the Meego operating system on the N9)

but we are not bringing it to market fast enough.

(while not fast enough, Nokia still was doing the innovation far faster - four YEARS faster - than Apple for example, see Patent court settlement in the above - Apple was stealing from Nokia not the other way around)

We thought MeeGo would be a platform for winning high-end smartphones.

(it also clearly is. The market reception for MeeGo based N9 is overwhelmingly superb. The MeeGo based N9 is rated by tech analysts not only as Nokia's best smartphone ever, but that both the hardware and the software are rated on par with the iPhone 4S in most reviews, and incredibly for Nokia, some actually rate the N9 and MeeGo better than the iPhone 4S and iOS. The N9 is rated far above all other rivals running on Android or Blackberry or Windows based operating systems, including Nokia's own Lumia series. This is the best reception of any Nokia handset, and especially any new smartphone software ever to carry the Nokia brand)

However, at this rate, by the end of 2011, we might have only one MeeGo product in the market.

(Sure. Like Madonna said to Wayne and Garth on Saturday Night Live: "And monkeys might fly out of my butt."Anything 'might' happen but the reality is, that even after Elop personally terminated one ready-for-sale MeeGo unit in early 2011, and then torpedoed the MeeGo staff, resources and funding, Nokia still managed to create two more MeeGo handsets - the N9 and N950 - both that went to production well before the first Microsoft handset appeared. The truth is, Nokia was fully able to have three MeeGo devices on the market were it not for Elop's personal meddling)

At the midrange, we have Symbian. It has proven to be non-competitive in leading markets like North America.

(by 'non competitive' in North America, that Symbian was still outselling Microsoft's own Windows Phone OS in the USA at the time, until Elop later killed all Symbian sales for the USA in the summer of 2011. But the reality is, that 'markets' is more than just one market of the USA. Symbian had over 75% market share in China, now the world's largest smartphone market, bigger than the USA. Symbian had over 60% market share in Singapore the country with the highest penetration rate of smartphones globally. Symbian had over 70% market share in India, the mobile market with the biggest growth rate. Symbian was the biggest handset platform in Japan, the country with the most advanced phones, a country where the original iPhone was literally obsolete when it launched in the USA in 2007. Symbian was the biggest smartphone platform in Europe, a market both bigger than North America and more advanced in both maturity of smartphones, generation of smartphones, new market sales size of smartphones, and penetration rate of smartphones. Symbian was also the run-away market leader in Latin America and Africa. Symbian was the bestselling smartphone on five of the six inhabited continents and Nokia's Maemo was the bestselling smartphone on the uninhabited continent of Antarctica too. The only continent where Nokia's Symbian was not the clear market leader was North America where six other smartphone operating systems were all produced by domestic rivals, manufactured by North American handset brands. SIX local rivals! iOS, Blackberry, Android, Palm, Windows Mobile and Windows Phone. And even in this market, at the time, Symbian managed bigger sales than two highly praised domestic rivals, Palm and Windows Phone at the time)

Additionally, Symbian is proving to be an increasingly difficult environment in which to develop to meet the continuously expanding consumer requirements, leading to slowness in product development

(which is why Nokia developed Qt as its application development tools and environment. Qt would support not only Symbian which powered more than half of all smartphones in use worldwide, but also supported Android and soon also Blackberry smartphones reaching more than three quarters of all new sales of smartphones; plus supporting Nokia's featurephone system S40 which more than doubles the accessable market for app developers, plus supports Nokia's Linux based future platform, MeeGo. Developers using Qt have rated it by far the fastest way to create smartphone apps compared to tools for any platform including iPhone, Android and both Microsoft platforms)

and also creating a disadvantage when we seek to take advantage of new hardware platforms. As a result, if we continue like before, we will get further and further behind, while our competitors advance further and further ahead.

(by falling further and further behind, Nokia was massively bigger than any of its rivals - in smartphones Nokia Symbian smartphones sold more than the next two biggest rivals - combined! And Nokia grew smartphone sales strongly in 2010 at 48% per year, while ending the year with renewed strong growth in profits)

At the lower-end price range, Chinese OEMs are cranking out a device much faster than, as one Nokia employee said only partially in jest, “the time that it takes us to polish a PowerPoint presentation.” They are fast, they are cheap, and they are challenging us. And the truly perplexing aspect is that we’re not even fighting with the right weapons.

(And what 'right weapons' would that be? Is that why Elop created the Lumia range, USA designed smartphones that were released in Europe? The same Europe where Nokia's European designs have dominated being the biggest smartphone sellers literally in every European country in 2010. While most US based smartphone designs are seen as synonymous with total failure such as Palm, Motorola, Danger, Compaq, HP, Dell, Kin, etc)

We are still too often trying to approach each price range on a device-to-device basis.

(by which strategy outside of USA, Japan and South Korea, the only three countries where there are several domestic smartphone makers - in the rest of the world where 93% of the total population of Planet Earth lives, Nokia smartphones had a market lead in literally every other country except these three. The strategy was somehow 'failing' in Elop's mind apparently)

The battle of devices has now become a war of ecosystems,

(which is exactly why Nokia was the first smartphone manufacturer to create a smartphone centered ecosystem years before there was an iPhone - and Apple itself did not even let the original iPhone owners install apps to the original iPhone 2G. Apple then copied Nokia's ecosystem thinking in developing the App Store - but Apple did it obviously better, like Apple always does - and since then, Nokia's Ovi store was taking lessons from Apple's innovative thinking and inspite of that, Ovi was still the second bestselling app store of the planet, far ahead of rivals such as Blackberry, Windows or Palm etc)

where ecosystems include not only the hardware and software of the device, but developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and many other things. Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem.

(Reality check! In 'hardware' and 'software' ie the operating system (OS) - Nokia was in installed base of smartphones 4 times bigger than its nearest rival. In new sales of hardware Nokia was more than twice as big as its nearest rival. In the OS war, Nokia's Symbian was still selling more than Android at the time. With 'developers' Nokia's developer community was more than twice as big as the nearest rival. In 'applications' Nokia's app store (Ovi) had the second most apps behind only Apple at the time. In 'eCommerce' Nokia's Ovi store sold all forms of digital content as one of the world's biggest digital content stores and by far the most global store across more than 100 languages. In 'advertising' Nokia's mobile advertising unit was one of the biggest in the world. In 'social applications' Nokia was one of the pioneers on mobile from Nokia Live Blog and Club Nokia to various social and community services since. In 'location-based services' Nokia's Navteq was the biggest and powered many rival systems not just Nokia's world-leading mobile mapping. In 'unified communications' Nokia had been extending Ovi services to messaging. There is no area in the ecosystem as defined by Elop, where Nokia was not a major player or the market leader. On most of them, Nokia's ecosystem including Symbian, Ovi and Qt was the run-away leader. Apple's iPhone and App Store, Google's Android, RIM's Blackberry, HP's Palm, and Microsoft's two platforms, Windows Mobile and Windows Phone were all dwarfed just on these metrics as mentioned by Elop, not to mention when other Nokia assets are mentioned such as carrier billing support, language support, open source, Linux support, handset partner ecosystem, etc)

This means we’re going to have to decide how we either build, catalyse or join an ecosystem.

(So when Nokia CEO finds he has the biggest, best, most dominating ecosystem ever seen in mobile, that was growing at 48% per year, he somehow wants to abandon it?)

This is one of the decisions we need to make.

(this is a decision only a moron would make. There is no decision to make! If you are winning so comprehensively that you crush the competition - more than twice as big as your nearest rival - and you do that while growing strongly, and with growing profits -that is no place for any 'decisions'. As CEO you thank your organization and step out of the way, and let the competent staff continue to wipe the floor of the global market with rivals that are puny by comparison.)

(Let me add a personal comment here. I am 100% certain, that at this point in the memo, any sane Nokia employee knew they had a lunatic as a boss, and all the best brains started to plan an exit from Nokia. The CEO lost all credibility if he utters the above statement, that there is a 'decision we need to make' when you dominate the market currently, you are growing, you have correctly anticipated the changes that are now happening in that market, and you are profitable doing it. This is the obvious trend where the industry is headed and Nokia was poised to continue to dominate it long into this decade, not joining some mythical third (in reality 8th) ecosystem but rather owning and controlling the clear first ecosystem of mobile. When Elop felt he needed a decision here, shows he was incompetent and just for saying that in his memo, proves he is not fit to lead Nokia. He will never be trusted by his staff as a sane CEO who is interested in what is best for Nokia.)

In the meantime, we’ve lost market share

(this is natural and inevitable and unavoidable if there is a genuine market opportunity. Nokia invented the smartphone and started with 100% when it had no rivals. As rivals came in, of course Nokia lost market share. Sony lost market share when other music player makers started to copy the Walkman. Daimler Benz lost market share after other car manufacturers appeared. Apple lost market share when others launched rivals to the iPad. The point is, that Nokia towered over its rivals and only a fool would abandon a lead when you have essentially lapped the whole field of rivals)

we’ve lost mind share

(yes! Nokia had lost mind share badly to Steve Jobs led Apple. It was well known that past Nokia management was not good at the mind share war. This was one of the skills the Board hoped to find in the next CEO, not to change Nokia's strategy, but rather to communicate Nokia's dominating position more succinctly to the analysts and investors, to bring Nokia's reality more in line with the distorted impressions in the war of the 'mind share')

and we’ve lost time. On Tuesday, Standard & Poor’s informed that they will put our A long term and A-1 short term ratings on negative credit watch. This is a similar rating action to the one that Moody’s took last week. Basically it means that during the next few weeks they will make an analysis of Nokia, and decide on a possible credit rating downgrade.

(since then Elop's actions have demolished that rating with three more downgrades by all three ratings agencies, and today Nokia's rating is at junk status)

Why are these credit agencies contemplating these changes? Because they are concerned about our competitiveness.

(Elop's direct actions caused a comprehensive global collapse of Nokia market share in smartphones falling from 33% in 2010 when he took over to 12% by Q4 of 2011. Now Morgan Stanley projects that the Microsoft partnership will be so damaging to Nokia smartphone sales that they sell only 37 million Lumia phones in 2012 and by 2013, the Nokia smartphone market share will be at 8%. The reality is likely to be far worse still)

Consumer preference for Nokia declined worldwide. In the UK, our brand preference has slipped to 20 percent, which is 8 percent lower than last year.

(so Elop not being satisfied with Nokia preference slipping in the UK, decided to devastate it, and now Nokia has lost 80% of its market in the UK. No Nokia smartphone reached the 10 bestselling smartphones in the UK for Christmas. A year before, Nokia sold four out of every 10 smarpthones in Britain)

That means only 1 out of 5 people in the UK prefer Nokia to other brands. It’s also down in the other markets, which are traditionally our strongholds: Russia, Germany, Indonesia, UAE, and on and on and on. How did we get to this point? Why did we fall behind when the world around us evolved? This is what I have been trying to understand. I believe at least some of it has been due to our attitude inside Nokia. We poured gasoline on our own burning platform.

(by 'we' Elop is not talking of Nokia employees. He is using the Royal pronoun meaning himself. Yes, after personally setting Nokia's strong solid platforms on fire, he then proceeded to pour gasoline onto his own platforms all through the year with one catastrophy after another (Microsoft announcement, N9 and MeeGo damage, Ovi rebranding, Nokia numbering/naming, patents, factories, layoffs etc etc) resulting in Nokia's brand being kicked out of the 10 most valuable brands globally, for the first time ever)

I believe we have lacked accountability and leadership to align and direct the company through these disruptive times.

(by lack of accountability Elop means that his actions bear no correlation with his own words and by leadership he means that most senior Nokia execs who had invested decades into the company, have suddenly fled the company many resigning in protest. To address the 'lacked leadership' Elop then admitted he miscalculated how big the loss would be in Q1 of 2011, then admitted he was surprised to have to announce a profit warning for Q2, then showed Nokia leaderhip in refusing to give annual guidance. And after promising 150 million Symbian devices up to 2016, he has since reneged on that promise too, now suggesting the Symbian line will be terminated this year producing only half the promised amount. This is Elop style of 'leaderhip' and 'accountability')

We had a series of misses.

(which led Nokia to tower over all of its rivals selling more than twice as many smartphones as Apple sold iPhones in 2010, and more than four times as many smartphones as Samsung - and Nokia did this in 2010 generating healthy profits in its smartphone unit. If that is what Elop calls a 'series of misses' I would like some of that please. Series of misses makes you twice as big as your nearest competitor, while making a big profit. Yes. But how does Elop fix that? Today both Samsung and Apple alone sell more smartphones than Nokia and Nokia's smartphone unit under Elop is generating huge losses)

We haven’t been delivering innovation fast enough.

(by 'delivering innovation fast enough', we now see how Elop delivers innovation. Nokia had introduced innovations such as forward-facing cameras and multitasking years before the iPhone; and were known for such high utility features as microSD memory card expansion slots, removable batteries and full Bluetooth file transfer ability that Apple still doesn't support; and recently added such market leading features as 12 megapixel cameras, Xenon flashes and NFC (rumored to be in the next iPhone). Elop then produced Lumia smartphones which are genuinely regressive in ability removing all those 'staples' of Nokia flagship smartphones, going back in ability and past Nokia smartphones now exceed these new phones in ability. So Nokia's past flagship smartphones have had these features, but the Lumia 800 does not! That is how Elop understands 'delivering innovation fast enough'. Elop must have gone to the same school of speaking as Rumsfeld. Whatever he says, he will then literally do the exact opposite. Elop now delivers innovations - EVEN MORE SLOWLY than before. When Nokia had literally delivered innovation faster than any rival - on points Apple is so proud it mentions them in the headlines or first paragraphs of the press releases for the newest iPhones - Nokia has been as much as four years ahead of Apple. Not on trivial details, these are the top-line items Apple itself celebrates in its hardware AND its software. Now Elop shows us how he intends to run Nokia. Two first two new Lumia phones have we seen a regression in Nokia flagship smartphones never seen before.)

We’re not collaborating internally.

(so therefore Elop sells whole business units of Nokia, creates massive organizational and procedural changes, makes idiotic management decisions, half of which he then back-tracks and flip-flops to further confuse and stress his staff and confuse the market, media and analysts, while compounding the problems of collaborating internally by firing people by the thousands)

Nokia, our platform is burning.

(it wasn't before Elop came to town, but it is now)

We are working on a path forward — a path to rebuild our market leadership.

(and Elop's way of building is to exchange 33% market share in 2010 for 12% in Q4 of 2011 and as low as 8% for 2013)

When we share the new strategy on February 11, it will be a huge effort to transform our company.

(by 'our company' he must have been talking of Microsoft, which desperately needed Nokia to come and rescue the Windows Phone platform which was truly a market disaster by this time, having fallen from 12% market share to 2%. But yes, even after this memo, Microsoft's brand new Windows Phone OS market share fell by another half, to about 1%, and it is still outsold by its older Windows Mobile sibling)

But, I believe that together, we can face the challenges ahead of us. Together, we can choose to define our future.

The burning platform, upon which the man found himself, caused the man to shift his behaviour, and take a bold and brave step into an uncertain future. He was able to tell his story. Now, we have a great opportunity to do the same.

Stephen.

WE WILL BE GREETED AS LIBERATORS

The Burning Platforms memo disaster was to mobile phones what the Rumsfeld-Cheney communications were about the war in Iraq. We know where the weapons of mass distruction are, said US Secretary of Defense Donald Rumsfeld on TV. We will be greeted as liberators, said Vice President Dick Cheney. Its a slam dunk case, said CIA Director George Tenet about the weapons of mass distruction. etc. The costs of the war would be paid by the oil revenues according to Paul Wolfowitz, the logic of "known unknowns and the unknown unknowns" by Rumsfeld etc. The militarist wing of the George W Bush administration ended up with a whole slew of faulty statements about what would happen. When Elop released his Burning Platforms memo, that memo had enough warning signs, that it too was like a handgrade rolling around Nokia headquarters with the pin pulled, waiting to explode. Now we know and can measure the damage. But Elop is like many North America-trained executives, a great communicator. He spun his poisonous web with the sweet smell of lies and innuendo.

So lets be clear. As I wrote a year ago, the sentiment in the memo was totally correct. Nokia was facing ever tougher competition, at the high end from the Apple iPhone and Google's Android. At the low end from Chinese handset manufacturers. And that the battle for the future for Nokia would be ever more about smartphones and their ecosystems. I totally agreed with that sentiment a year ago, and I still totally agree with it today. Nokia had been in the process of changing, but needed to change much more still. The sentiment was all correct. I fully supported the sentiment in the memo.

But the dastardly part of the memo is that Elop said one thing, while clearly doing the opposite. So where the sentiment and main themes of the memo were indeed the right direction for Nokia - Elop then took the past year and did the exact opposite. Yes, Mr Rumsfeld, did you say 'we will be greeted as liberators?'

The Burning Platforms memo said the future would be about smartphone ecosystems. Elop then took the world's largest and strongest ecosystem and torpedoed it. He then proceeded a few days after this memo to announce that Nokia replaces the Symbian, MeeGo, Ovi Store and Qt development tools based ecosystem - by far the biggest in the world, and being open source based, it was also the most robust and strongest for the future. He replaced it with the smallest and weakest of them all, the one by Microsoft called Windows Phone, which is not open source and where Nokia has no control of its future, becoming in effect the slave to Microsoft. We are just celebrating Black History Month in the USA. Imagine after the US Civil War which freed the slaves, if some slaves who were free (Nokia) would then voluntarily move to some other country where they still had slaves (like many countries in Latin America) and voluntarily sold himself and his family as slaves again? How idiotic is this?

One year ago, in February 2011, Windows Phone was already so weak, the then-new OS was already shrinking in size perilously, YES! All other new operating systems grow - Microsoft Windows Phone was already shrinking. Microsoft gave away 2 million Windows Phone handsets but couldn't then maintain that level in real sales. A year ago, it was already being outsold by not just bada of Samsung, but Microsoft's own older OS, Windows Mobile. Still now, the latest quarterly data from the USA, Microsoft's best market - tells us that Windows Phone cannot outsell even Windows Mobile. The tiny market share of Windows Phone fell by more than half in the next nine months after Elop selected it.

Elop proceeded to destroy his existing strong ecosystem, from abandoning the promised evolution path for developers from Symbian to MeeGo, to terminating the Ovi store branding, to shifting away from Nokia's long-standing supplier chain partners, to selling sets of its patent portfolio, to selling its advertising arm, to selling whole factories and thousands of designers and programmers. Elop talks one thing, he does the exact opposite.

THE CRUEL BOTTOM LINE

This kind of management communication is one of the future strategy of a corporation. The effect of that strategy is best measured 'by the bottom line' ie how did Nokia do, before and after this memo.

In 2010, Nokia Corporation as a whole (including the networks unit and Navteq and other parts, including handsets obviously both smartphones and dumbphones) had sales of 42.2 Billion Euros (about 57 Billion dollars). Where the hardware side of the mobile industry where Nokia competes against Motorola, Ericsson, Samsung, Alcatel-Lucent, Apple, RIM, Huawei and ZTE - grew by 12%, Nokia's sales also grew.. by 4% from the difficult year 2009 before. Nokia's growth was hampered by the NokiaSiemens Networking unit. The growth engine for Nokia was its smartphone unit, which generated 17% growth in revenues for Nokia in 2010.

Now in 2011, guided by the Burning Platforms memo, while the mobile telecoms hardware industry grew again by about 12%, Nokia did not see growth in revenues. Nokia total corporate revenues fell by 9% to 38.7 Billion Euros (52 Billion dollars). So Elop's Burning Platforms memo and his subsequent actions swapped revenue growth of 5% for revenue decline of 9%. The true 'bottom line' destruction in Nokia revenue growth was a decline of 14% in revenue growth - this while the industry grew 12%. The effective damage was thus 26% to Nokia's relative position against all its major rivals like Samsung, Apple, Sony, RIM, HTC, Ericsson, Alcatel-Lucent, Huawei etc.

DRIVEN TO LOSS-MAKING

Usually, when a CEO forces his company 'on a diet' to make sacrifices, it is because the corporation has become loss-making, then the CEO forces austerity measures to help a smaller company recover profits. Elop seems to be doing the opposite. Again, remember 'Greeted as Liberators' - Elop does strictly the opposite of what he tells is the smartest thing to do.

For the full year 2010, Nokia total profits grew by 72% from 2009 when the annual profits had shrunk to perilously low levels. Even so, throughout the economic crisis of 2008-2010, Nokia was the only major legacy handset maker with a full portfolio of both smartphones and dumbphones - who generated a profit in the handset unit in every quarter of the economic crisis. The crisis pushed Samsung, LG, Motorola, SonyEricsson etc into loss-making and finished off several of Nokia's long-standing rivals like Palm and Motorola, and resulted in Ericsson finally ending its handset production last year, selling its share of the SonyEricsson partnership to Sony. But yes, Nokia was the only major full-portfolio handset maker who weathered the economic crisis so well, that its handset unit never reported a loss in even one quarter.

After the Burning Platforms memo, for 2011, Nokia profits plunged into loss-making. This took Elop by surprise and Nokia issued a profit warning and all three ratings agencies have issued warning after warning downgrading Nokia ratings. The profits now for 2011 had vanished and instead of 2.1 Billion Euros of a Profit as Elop inherited in 2010, he now pushed Nokia into generating its first annual loss ever since Nokia Corporation reogranized and focused on the telecoms sector two decades ago. Nokia's corporate loss for the full year was 1.1 Billion Euros. So his memo and Elop's further destructive actions directly caused 3.2 Billion Euros of losses to the company for the full year.

MAYBE WAS NOT THAT BAD?

So maybe Tomi is now 'cherry-picking' the most extreme data points? Maybe the year 2010 was particularly rosy and the full year data for Nokia was particularly bad, but the trend is perhaps a lot better? Lets examine.

Q4 of 2010 was the first full quarter, where Stephen Elop was in charge of Nokia. Nokia had been in trouble before Elop came onboard. The previous management by Olli-Pekka Kallasvuo had mismanaged Nokia badly and I have said so here. And Elop took early decisive steps to help drive Nokia back to healthy profits, including some painful layoffs that many in the industry - including me - agreed was the right thing to do.

So I am not trying to revise history. Lets stick to the numbers. If we look at the first full Quarter that Elop had run Nokia, the total Nokia corporate revenues that quarter, Q4 of 2010, grew 23% from the previous Quarter ie Q3, before Elop. Similarly profits, Nokia Q4 operating profit grew 72% from Q3 of 2010. Nokia had been in trouble in 2009, but since Elop took charge in late 2010, Nokia was clearly on the mend and feeling healthier again.

Since then, now the latest Q4 of 2011, the latest achieved by Elop, compared to the only one he did before the Burning Platforms memo, the revenues of Q4 2011, compared to Q4 of 2010 - are down 21% !!!! So the trend is actually far worse than the overall annual data.

The Nokia corporation operating profit in just Q4 of 2010, the first Quarter Elop was in charge, was 884 million Euros (1.2 Billion dollars) - note that was in just the one quarter. Now one year later, in Q4 of 2011, Elop's new Burning Platforms-based Nokia produced a corporate loss of 954 million Euros (1.3 Billion dollars). So the trend is even worse than for revenues overall. In profits, Elop found a very healthy, 'recovering' Nokia corporation, that was able to generate 1.2 Billion dollars of profits in just the Q4 quarter, and with the Burning Platforms memo and the rest of Elop's mad management style, he now swaps the strong profits for massive 1.3 Billion dollar losses per quarter!

WHAT OF THE HANDSET BUSINESS?

The Nokia corporation total business has four major elements, handsets form two of those, the smartphones and dumbphones. The third large unit is the Networking division NokiaSiemens Networks, and the fourth but far smaller is the Navteq unit with maps, navigation etc. Nokia has been in the process of selling the NSN unit and Navteq is not generating profits. Lets not include those, and lets look at Nokia's primary business, the handset side which generated two thirds of Nokia revenues when he took over. That is clearly the future for Nokia as Elop is trying to sell the NSN unit, so the handsets division is what Elop should be prioritizing. Maybe the above is not the real full picture, and the reality is better at handsets.

Well, first of all, the handset industry overall grew by 14% from 2010 to 2011. Nokia's handset unit sold a sliver under one third of all handsets of the world in 2010 and the unit had growth of 5% in total handset unit sales from 2009 to 2010, and also 5% growth in revenues generated by the handset unit from 2009 to 2010. How did the Burning Platforms memo help Nokia's core business?

Nokia's handset business turned from growth to decline, right after the Burning Platforms memo. The next quarters Nokia reported declines in unit sales and revenues. Today we see the results for the full year 2011 and Nokia exchanged an annual growth rate of 5% in handset unit sales, to a decline of 8% from 453 million to 417 million handsets. The loss in Nokia's growth rate due to the Burning Platforms memo was a true decline of 13%.

But that does not take into account the strong growth of the industry, so as I said, the world's handset market grew by 14% in the past 12 months. So when comparing Nokia to its competitors, under Elop's past 12 months, Nokia has fallen behind its competitors and the market overall by - 27% !!! Note, this is not just 'smartphones' (which is far worse). This is the overall total handset business, Nokia's core business. The Burning Platforms memo and Elop's subsequent mismanagement turned Nokia's growing handset unit into declines. Elop has wiped out a quarter of Nokia's core business.

All the news from the handset unit is bad. Not just unit sales are down. Revenues are down 13% when the global industry grew. Profits in the handset unit are down by nearly a third from 17% contribution margin in 2010 to 12% today. And that modest profit obviously now is all produced by the low-cost 'dumbphones' as the smartphone unit has been plunged into loss-making.

IS TREND ANY BETTER

So if we again look beyond the full-year results, and look only at the last quarter, for the latest trend signs. Are things getting better or are they getting worse at Nokia? Because Nokia changed its accounting units, we can't do an apples-to-apples comparison in the quarterly data all the way back to 2009 but we can compare Q4 of 2011 to Q4 of 2010. The new reporting unit for Nokia includes handsets and services called Devices and Services (so this is even more in line with Elop's 'ecosystems' thinking) but most of the revenues are coming from handsets, not services still today. So this is close to comparable to the old 'handsets unit' of Nokia.

A year ago for the Christmas Quarter, Nokia's Devices and Services unit generated sales revenues of 8.5 Billion Euros (11.5 Billion dollars). That has crashed 29% in the past year to 6.0 Billion Euros (8.1 Billion dollars) today. The trend is FAR WORSE looking at the latest quarter, than the full year. 29% decline for the latest quarter, vs 17% decline comparing the full years. Yes, the situation is far worse.

Nokia's handset average sales price (ASP) was 69 Euros (93 US dollars) it is down 23% to 53 Euros today (71.50 US dollars). Nokia's operating margin in the Devices and Services unit was 12.1% in Q4 one year ago, it has fallen by 61% to 4.9% today. Nokia total profits generated in Q4 a year ago by the main business, the Devices and Services unit of Nokia was 1B Euros, or on an annual basis, 4 Billion Euros (5.4 Billion US dollars of annual profits). That has cratered to 295 million Euros in Q4 of 2011, or 1.2 Billion Euros annually (1.5 Billion US dollars).

The Burning Platforms memo, comparing the last full quarter before it, when Elop was already in charge, to the latest quarter with Elop in charge after the infamous memo - means Nokia has destroyed 3.9 Billion dollars of annual profits - this while the global handset industry grew by 14%!

COMES DOWN TO SMARTPHONES

The Burning Platforms memo was about all of Nokia, and not only about smartphones. But the emerging consensus view of the handset industry is that the future of handsets is smarpthones. And increasingly experts are coming to the view that in the near future, all phones made will be what we now define as 'smartphones'. So the critical item of the future of any legacy handset maker is how they manage the transition from dumbphones to smartphones. Note, Apple, HTC and RIM don't need to suffer this painful and expensive transition, they all started in this industry only recently, as 'pure' smartphone makers. The older legacy manufacturers like Nokia, Samsung, Motorola, SonyEricsson, LG etc have to manage a costly transition from selling basic dumbphones to the more modern, more expensive and more profitable smartphones. All but Nokia had suffered loss-making quarters in that painful transition - only Nokia managed the change profitably in its handset unit. Some of Nokia's legacy full-portfolio handset makers did not survive the transition from dumbphones to smartphones, see Siemens, Motorola and now Ericsson out of SonyEricsson partnership.

Nokia invented the smartphone. Nokia provided QWERTY based business-oriented smartphones four years before the first Blackberry by RIM. Nokia then invented the consumer-oriented smartphone, again four years before the first iPhone. Nokia provided touch-screen smartphones, an app store based ecosystem etc long before the iPhone. When Elop took over, Nokia was not just bigger than RIM, or bigger than Apple in smartphones, in 2010, Nokia's smartphone unit alone was literally bigger than all smartphones sold by RIM and Apple - combined. That is what you call market dominance. It is far bigger a market lead than what Coca Cola has over Pepsi, or what Toyota has recently had over General Motors (and now GM seems to have taken the lead again). It is far more than Airbus's lead over Boeing. It is far more than Samsung's lead over Sony in televisions. It is hard to find any recent consumer technology industry that has existed for more than ten years and where there is genuine global competition, where the market leader is so much stronger than its nearest rivals.

There was (and still is) a widely-held misconception in the USA, that Nokia had lost to the Apple iPhone and Google Android. This was because Nokia had, indeed, fallen behind in the US market. What Nokia had focused on, instead, was the rest of the world. When any investor is told the truth about the mobile phone global market, that the USA accounts for only 5% of all mobile phone accounts - and that Nokia was the overwhelming market leader on all other continents except North America - both in dumbphones and yes, smartphones - then the picture changes. In almost any other industry from car sales to airplane sales to movie box office revenues to music sales to computers to advertising revenues, the USA accounts for the lion's share of the world market. That is not the case in mobile phones. The world's biggest smartphone market is no longer the USA, it is China. In 2010, Nokia's market share in Chinese smartphones was 76% according to Canalys. Who cares, if Apple had 22% of the US market - the US total mobile phone market had reached 100% penetration level in 2011 and was stagnant, the only growth in smartphones was the migration from dumbphones to smartphones. Nokia was crushing Apple in China in smartphones - by 20 to 1 in 2010 - and the Chinese smartphone market was still growing strongly. This year 2012 China's smartphone market will be 50% biggert than that in the USA, and in two years will be more than twice as big. And China is not even the fastest-growing mobile market in the world - that is India - another market where Nokia crushed Apple in smartphones by more than 20 to 1 in 2010. This is the debate about the 'mind share' what Elop was hired to manage for Nokia, to help educate the investors and partners, that Nokia globally was the giant and Apple and RIM and HTC were the little start-ups who did, yes, sell a lot in the US market but globally, were utterly dwarfed by Nokia. But Elop didn't want to deal with that reality. He wanted to change the strategy that was winning.

That is what Elop found when he came to Nokia. Nokia's smartphone unit had been in trouble before, yes, with delayed handsets and soaring costs, but that situation had been mostly past by the time Elop took over. Look at Nokia smartphones in Q4 of 2010, the first quarter Elop took over. Nokia's smartphone division had grown unit sales 48% for the full year 2010 compared to 2009. The revenues at the smartphone unit had grown 17% for the full year. And while Nokia didn't break down the profitability at that time, since then after Nokia's changed internal accouting, we found out that in Q1 of 2010 the profit margin for the smartphones unit was 9% so using that percentage for the year 2009, Nokia would have had about 1.1 Billion Euros of profits in the unit for the full year 2009. That had now grown in 2010 to 1.4 Billion Euros, so Elop's critical smartphone unit had seen a growth of profits of 27% in one year.

Most importantly, the first full quarter Elop was in charge, in Q4 of 2010, Nokia smartphone division profits exploded by 65% in just three months! This is the future of the industry, this is the future of Nokia, this is what Elop gets to run and manage, and his flagship unit is strongly roaring back into strong profits. The 25% of Nokia handset sales generated nearly half of Nokia corporation's total profits essentially subsidising the loss-making Networking unit at the time. If that was not a 'winning asset' for the new CEO, nothing can be. You tower over your rivals, you are profitable - and you grow strongly, and your profits are growing fastest

The global smartphone industry grew 71% in 2010 from 174 million units of smartphones sold to 298 million. Nokia did not match the industry growth rate, and thus did see some erosion of its market share, but Nokia did grow 48% of Nokia branded smartphone sales in 2010. And Nokia still sold more than a third of all smartphones sold worldwide that year, with a market share of 34% for the full year 2010. Nokia was still recovering from the troubled global economy, but did see total smartphone unit revenues grow by 17% and its profits in the smartphone unit grow by 27%. If you are the CEO and see a loss in market share, but that is exchanged for an increase in profits, it is usually not a bad thing, especially if your company was already profitable and it still grew overall company sales at a very healthy rate, with increasing profits.

Now the Burning Platforms memo. Since then, in 2011, the global smartphone industry grew by another 63% from 298 million to about 485 million units (we still await the final numbers from some analyst houses). Nokia's major smartphone maker rivals like Apple and Samsung grew very strongly, Apple nearly doubled its smartphone units in size, while Samsung grew by nearly 3x in size last year.

How did Nokia's vital smartphone unit do in the past year, powered by the Burning Platforms memo? Nokia took a smartphone growth rate of 48% per year, and replaced it with a decline of .. 25%. Nokia smartphone sales collapsed from 104 million in 2010 to 77 million in 2011. This while the industry exploded by 62% growth! When you go from 48% growth per year to 25% decline, it means your growth rate declined by their combined rate or 73% ! Nokia's CEO has demolished 73% from Nokia's growth in its most critical smartphone unit, in just one year.

That is not the full picture. Because the industry grew so strongly, Nokia needs to be compared to the industry growth. If Nokia held steady with only the rate of the industry growth in the past year, and thus grew 62% like the industry (bearing in mind Apple almost doubled in size and Samsung nearly tripled in size) then Nokia should have sold 168 million smartphones this year. Instead, Nokia only sold 77 million. So in a very literal sense, for the full year, Elop has demolished 55% of Nokia's smarpthone market. But that picture is not giving the full story, because Q1 of 2011 included China gift-giving seasonal sales, which happened just before the Burning Platforms memo. So for us to see how big the damage is, we really have to compare Q4 of 2011 to Q4 of 2010.

TREND IN SMARTPHONES, Q4 TO Q4

The Nokia smartphone unit in Q4 one year ago, in 2010, had unit sales of 28.3 million units. Just compared to the immediate previous quarter, the smartphone unit had seen 7% growth (quarter-on-quarter, not year-on-year). Nokia's smarpthone unit in Q4 had just seen a jump of 22% in revenues in just one quarter, and a giant leap in profits just in one quarter, of 65%. The profit margin in the smarpthone unit was 12%.

One year ago, in Q4, the Nokia smarpthone unit was the strongest unit in all of Nokia, delivering only 25% of Nokia's handset sales, but 33% of Nokia's total revenues, and 45% of Nokia's total profits. Compared to the previous quarter (and the time before Elop) the Nokia smartphone unit was growing unit sales very strongly, growing revenues even more strongly and jumping profits massively.

Now one year later, in Q4 of 2011, Nokia's smartphone unit sales are down to 19.6 million units. A year before, Nokia was growing 48% in smartphones, now under Elop, Nokia's key smartphone division saw unit sales crash by 31%. He caused damge to Nokia's growth of 79%. Compared to the industry growth, Nokia should have sold 52 million smartphones in Q4 of 2011, if only Nokia had held its share from 2010. Instead under Elop, Nokia smartphone sales collapsed and Nokia smartphones produced sales that are down 63% from what it should have been.

Nokia's market share has crashed. Nokia sold 34% of all smarpthones in 2010. Now Nokia sells 12% of all smartphones globally. Nokia's ASP for smartphones has fallen 9% to 140 Euros (189 US dollars) which obviously is now under 200 dollars for the first time in Nokia's history. And it should be noted, that this is an artificially high number, as it reflects 250 million dollars of Microsoft cash given to Nokia. If measured by money paid by consumers, the 'true' Nokia ASP is down to 127 Euros (172 US dollars) and reflects a crash of 18% from the 154 Euros it was in Q4 of 2010.

Nokia smartphone division quarterly revenues have collapsed 38% from 4.4 Billion Euros (5.9 Billion US dollars) one year ago at Q4, to 2.7 Billion Euros (3.6 B US dollars) now in Q4 of 2011. This all while the global smarpthone industry grew 62% in 2011. Just comparing quarter-to-quarter one year ago, Elop's memo has demolished 2.3 Billion dollars of smartphone sales revenues - per quarter! That means the equivalent damage of 9.2 Billion dollars of annual revenues. Elop is not the 8 million dollar man, he is the 9 Billion dollar man. He wiped out 9 Billion dollars of revenues from Nokia's division of the future. And thats before we account for any growth. If Elop had not touched anything, and Nokia had grown 'anemically' slower than the industry, at 48% like it did in 2010, Nokia would have sold 42 million smartphones in Q4 and even at the ultra-lowly (without Microsoft) ASP of 127 Euros, would have produced quarterly revenues of 5.3 Billion Euros (up 21%) ie 7.2 Billion US dollars. At an annual level that reflects revenues of 28.8 Billion dollars. But rather than deliver that for Nokia shareholders, Elop gives them 3.6 Billion dollars in Q4 which reflects an annual revenue level of 14.8 Billion dollars. Elop has wiped out half the rate of revenues Nokia was capable of just a year ago. Wow, what a memo, eh?

And Nokia's profit engine? It was shut down by Elop, it new bleeds cash. One year ago, in Q4 of 2010, the profits in Nokia's smarpthone unit were up to 510 million Euros (reflecting a growth of 65% from just the quarter before). That has been replaced by increasing losses, the losses at Nokia smartphone division are now at 192 million Euros in Q4 of 2011. Ever since the release of the Burning Platforms memo, for the three full quarters that have reported since, the Nokia smartphone division has reported a loss every time. So Elop replaced 510 million Euros of profits with 192 million Euros of losses. Just in the smartphone unit alone, Elop cut away 702 million Euros out of Nokia's profits - per quarter. That is the equivalent of 2.9 Billion Euros of annual profits demolished (3.9 Billion US dollars of annual profits).

HOW BIG IS BIG?

Elop's Burning Platforms memo (and yes, Elop's subsequent actions since like Microsoft, MeeGo, Ovi, Navteq, Qt, N9, N950 etc) have destroyed - just at the smartphone unit of Nokia - 3.9 Billion US dollars worth of annual profits. Without allowing for any growth at all - at the very very bare minimum, ignoring any damage to Nokia overall brand and Nokia's other units - Elop's Burning Platforms memo has caused Nokia a decline of 3.9 Billion dollars of annual profits. How big is that? The Fortune Global 500 listing tells us that profits of 3.9 Billion dollars are ranked about 130th biggest profits on the planet. For example total annual profits in roughly that scale are those of Nissan or Tesco or Walt Disney or Telecom Italia or Annheuser Busch or American Express etc.

Or to put it in another way. Just in the smartphone unit, Nokia abandoned annual revenues of nearly 15 Billion dollars and profits of nearly 4 Billion dollars. The Fortune Global 500 listing for 2011 had Blackberry maker RIM annual data as revenues of 19 Billion dollars and profits of 3.4 Billion dollars. In very rough terms, Nokia CEO Stephen Elop and his Burning Platforms memo has wiped out from Nokia smartphones the size equivalent to that of RIM, the maker of the iconic Blackberry! And in 2010, RIM was the world's second biggest smartphone maker slightly ahead of Apple's iPhone by unit sales.

Stephen Elop is the ultimate internal assassin murdering all of Nokia's corporate future and success. Because there is one more metric

TRANSITION IS REVERSED

The world of mobile phone handsets is currently in a transition from dumbphones to smartphones. In 2010, 22% of all mobile phones sold worldwide were smartphones. In 2011 that is up to 30% and for Q4 we have passed the point of 33% of all mobile phones sold worldwide being smartphones. We expect that the global tipping point will happen in a little over a year from now, when half of all handsets sold worldwide will be smartphones. Motorola reported that it had migrated 80% of its handset sales from dumbphones to smartphones last year, and Sony said after it bought out Ericsson from the SonyEricsson partnership, that this year 2012, will be the year Sony(Ericsson) will complete the transition and for Sony all of its handsets sold will be smarpthones.

The clear global trend is from low-cost dumbphones to higher cost smartphones. And Nokia was fully aware of this. Every year Nokia's market share in smartphones was higher than that it had in dumbphones. So very literally, as Nokia migrated its customers from dumbphones to smartphones - Nokia was gaining customers! The reverse was the case for most rivals, I calculated a few years ago on this blog that Motorola was suffering so badly in the transition that it was losing 7 out of every 8 customers it had, when trying to migrate them from dumbphones to smarpthones.

In 2010, 22% of all handsets sold worldwide were smartphones. But Nokia's own sales had reached the level of 25% of all Nokia branded handset sales being smartphones. Nokia was strongly ahead of the curve and yes, literally, Nokia was picking up market share as it migrated customers - so where the 'conventional wisdom' suggested Nokia was only a cheap phone maker for Africa and Asia, in reality, Nokia was remarkably capable of gaining share as it shifted customers to smartphones.

How are we today, after Elop's Burning Platforms memo? In Q4 of 2011, 33% of the world's handset sales are now smartphones. And Nokia's own ratio? Thanks to Mr Elop's mad management, Nokia now only sells 17% in smartphones, of all of its Nokia branded phones sold worldwide. Nokia has regressed dramatically and is now going against the global trend. While all other major rival full-portfolio handset makers like Samsung, Sony(Ericsson), Motorola, LG etc are pushing for a shift from dumbphones to smartphones, Nokia is going int the opposite direction! Nokia's Elop has truly snatched defeat from the jaws of victory!

In the MBA textbooks (likely ebooks) published in the 2020s decade, the lessons will be had about how the most widely spread technology ever - mobile phones - were once ruled by Nokia and Motorola. How Motorola lost its lead when the handsets transitioned from analog to digital handsets and Nokia took over. But then came the transition from basic voice and text oriented '2G' handsets to the 3G oriented data-intensive smartphones. And that while Nokia invented that shift, and Nokia literally led its rivals in that shift (even as new makers like Apple and RIM and HTC came in to shake the field). Nokia saw a pivotal moment in 2011 when Nokia towered over its rivals, more than twice as big as Apple's iPhone - and suddenly Nokia lost the plot.

Nokia was growing strongly in smartphones, generating healthy growth in revenues and huge growth in profits. Then the new CEO Stephen Elop in his bizarre madness refused all that, and instead plunged Nokia into a year of disasters and destruction. Elop caused Nokia growth to stall and collapse. Growth in handsets overall and more importantly growth in smartphones, turned into catastrophic decline. Revenue growth reversed into decline. Strongly growing profits turned into massive losses. The point where that started was not in 2009 under previous CEO management. Yes, Nokia had tons of problems, they were problems of execution, not of strategy. Elop was hired to fix problems of execution, not abandon Nokia's strategy. And the pivotal moment was that infamous memo, the Burning Platforms memo, which ignited the utter global collapse of profitable smarpthone-maker giant. Never in the history of mankind, have we seen the global leader of any 'platform' type of business like VCRs or DVD players or videogaming consoles or personal computers - or smartphones - abandon the race when they are leading it - towering over rivals in fact. Elop will be celebrated as the biggest fool in the economic history of mankind (and unfortunately for me as a Finn, the Nokia name will become synonymous with total suicidal surrender and commercial failure)

THE SENTIMENT WAS CORRECT

The Burning Platforms memo had a sentiment that was correct - Nokia was facing more competition and had to embrace change. There was strong competition from Apple and Android onto low-cost Chinese handset makers, and the fights of the future were to be won ever more on ecosystems. Elop could have used a revised/corrected memo to his advantage.

The actual memo however, had tons of errors in it, and its communication was interpreted globally as the CEO of the company bad-mouthing his own products, exactly like with the Ratner Effect. The damage from the Burning Platforms memo was immediate and comprehensive. We saw signs of it in the Q1 results last year, but that hided success out of China before the memo was released. So the real results were obvious in Q2 data and since then Nokia has seen a comprehensive global collapse of its business.

The Burning Platforms memo caused a collapse in the trust in the Nokia brand. The Nokia resellers boycotted which further fuelled the sales losses and crashed the value of the Nokia brand. Elop himself has repeatedly admitted that the situation is beyond his control, and he is helpless to steer his company. He admitted in quarterly results several times that the results surprised him, the unit sales loss was bigger than he anticipated, etc. He was ashamed to announce an unanticipated profit warning last Spring and since then Nokia has reported losses. The steady Nokia management was always known for reliable longer-term guidance for the next year, and Elop has ended that, admitting he is incapable of giving investors guidance on how Nokia will be in a year from now. That is all symptomatic of both incompetence and the immense damage done by this notorious memo.

NOW NOKIA IS BURNING

Nokia is bleeding. Elop is now firing staff and breaking what promises he had made. Previously Elop promised another 150 million Symbian based smartphones, now that is no longer true. Nokia is having a fire sale of its best assets, including trying to sell premium luxury phones unit Vertu, selling the advertising arm (what happened to a war of ecosystems haha) and already selling several batches of Nokia's best patents. Nokia has closed several factories including all remaining handset factories in Europe and obviously its last handest factory still in Salo Finland. Elop has already fired 30,000 Nokia staff or about a quarter it had when he took over.

Nokia was the 120th largest global corporation in the 2010 Global Fortune 500. After the damage by Elop, Nokia has already fallen so much it won't be in the top 200 when the next issue comes out this summer. Comparing the latest Quarter Q4 of 2011 to that one year ago, the total Nokia corporation has shrunk by 21% and turned from strong profits to big losses. Nokia's brand was the only European brand in the top 10 most valuable brands on the planet, and under Elop's leadership, the Nokia brand fell out of the top 10. Nokia's share prices were growing in the first five months under Elop's leadership - grew by 11% and had climbed past 8 Euros per share. Since this Burning Platforms memo, the Nokia share prices have fallen by more than half and are worth under 4 Euros today.

When Elop took over, Nokia smartphones were more than twice the size of the iPhones by Apple. Exactly one year later, by Q4 Apple's iPhone was selling twice as many smartphones as Nokia! Elop talked about ecosystems in his memo, but since the memo Elop has set fires to just about every Nokia-owned component of the world's strongest smartphone ecosystem, from ending the migration path for the developer community (via Qt) to eliminating various ecosystem parts or selling them like now with advertising.

The Burning Platforms memo did not mention Microsoft, the platform Elop next selected. I have not discussed the viability of the Microsoft strategy for Nokia (I have been analyzing it deeply on this blog before). It should only be said, that the current expectations by companies such as Morgan Stanley see the Nokia smartphones overall, led by the Lumia (Microsoft Windows Phone) platform to achieve something like 8% market share next year 2013. So Elop owned 33% of the global smartphone market, and now he might end with 8% next year? (and that 8% is seen by many as too rosy by the way, reality is more like 6% or 7%). Do I think this is a viable strategy? Of course not. Microsoft was yet another utterly futile decision by Elop, and one that was outrageously silly, as Microsoft's Windows Phone was literally shrinking in size even as Elop was selecting it - the smallest of 8 platforms and shrinking! This Elop would take to replace Nokia's platform which was the world's biggest - and still growing !

I'm sorry about the long rant on this blog, but I had to come back to the Notorious Burning Platforms memo for one, final, definitive analysis of how factually true - or not - it was - and what was its true effect. It will go down in history as the most damaging management communication ever about the existing products and services of any global Fortune 500 sized company. And as I explained, the memo has cost Nokia more than 14 Billion dollars just in its smartphone revenues (more in other units) and 3.9 Billion dollars of annual profits lost. It is the most damaging memo ever. And Elop should be fired just for the principle of holding management accountable for its mistakes. If you make the biggest mistake ever, you should be fired (for cause! So fired without any golden parachutes).

I LOVE NOKIA

A bit about me. This is not a hate blog about Nokia. I am a Finn, I was employed at Nokia HQ and left more than a decade ago. My first book was sold as an official Nokia book by Nokia. Nokia has used me and my consulting services widely over the past decade, all over the planet. I love Nokia. One of the phones I carry currently is a Nokia (the E7). My joke is that if you cut me, my blood is not red, I bleed Nokia blue. I love Nokia. I also felt Nokia was in trouble for many years, and was going in the wrong direction under Kallasvuo's management. I warmly welcomed Elop when he was hired and I wished him well here on this blog. I supported most of his actions in his first five months of leadership. It was this moronic Burning Platforms memo, which exposed to me, the true Stephen Elop as the 'delusional psycopath' who would destroy Nokia.

Delusion, you'll remember, means according to Wikipedia 'holding an absolute conviction despite superior information'. So if the CEO is shown superior factual data, he will still hold to his mistaken belief, and prefers to manage under a false perception, even as he is presented better factual information to the opposite. The Burning Platforms memo illustrates clearly that Elop was delusional when he wrote it - he even admits that with his words since, when he has issued statements correcting or backpeddaling from many of those idiotic statements in the memo.

Also remember the definition of psycopath again by Wikipedia, the pervasive pattern of violation of the rights of others - in this case the shareholders of Nokia and employees of Nokia and the company and its future as a whole. Elop has taken a willful pattern of deliberately destructive actions against the best interests of Nokia, and done it consistently. The only pattern an intelligent outsider can find, is to compare to the best interests of Microsoft. Elop's actions have been against Nokia's best interests - but can be explained as pursuing the best interests of another corporation, Microsoft - and as such, Elop is in breach of his fiduciary duty as CEO of Nokia. So please don't think Tomi hates Nokia. I love Nokia. But Elop is destroying Nokia and most dangerously, he is doing that inspite of superior information to the contrary. He refuses to deal with reality and has created a false world inside his head, to guide his management decisions. He has to be fired now, while there is a Nokia still left to save.

Elop correctly identified in the memo, that Nokia management had become lax and "lacked accountability and leadership". Yes, Stephen Elop, new CEO of Nokia. I will hold you accountable on this blog, even if the Finnish newsmedia seems silent, even if the major Financial press seem silent, even if the Nokia shareholders seem silent. You, Stephen Elop issued this management memo. You are responsible. You must account for the permanent damage you have caused. Because of your mismanagemenent Nokia is now selling assets like factories, firing tens of thousands of truly competent and skillful staff - who had been winning the war before you stepped on their success and ruined it for Nokia. You Elop said Nokia needs accountability. This is accountability. You are the biggest management failure of all time (of any Fortune 500 sized company CEO) and by EVERY measure you reversed growing profits and leading the industry for declines, losses and abandoning the leadership positions.

UPDATE FEBRUARY 13 - Stephen Elop was interviewed at Business Day the daily financial newspaper of South Africa. He said among other things "Nokia is no longer on a burning platform" and compared to the Burning Platforms memo time of a year ago, today Nokia was "facing a new era of growth". He added "Nokia's future was secure" (??? !!! ??? - is this not the same guy who cannot commit Nokia future to investors beyond 3 months?). Elop says much has changed at Nokia since he wrote the memo (duh! For the WORSE). He has already fired more than 30,000 Nokia employees and is unwilling to commit to no further cuts (yet is somehow certain of Nokia's future being 'secure' ?). And at the end of the interview we see the most damning statement by a CEO in utter denial of the market share collapse happening around him - Elop said he "would not lose sleep over the pace of growth of Samsung" !!!

In very short summary. A year ago Elop felt Nokia was on a burning platform when Nokia's smarpthone unit was growing 48% per year, was twice the size of its nearest rival, generated a third of Nokia's revenues, nearly half of Nokia's profits and was leading the industry average in migrating Nokia's customers from dumbhpones to smartphones. Nokia's ecosystem was the widest, strongest, biggest, most lucrative on the planet, either leading or second in rank by every measure imaginable, in most cases several times larger than its nearest rival. The total Nokia corporation generated a profit and Nokia's smartphone unit powered the growth of profits. Nokia's share price had grown 11% in the first five months of Elop's leadership. This is Elop's image of a catastrophic picture for Nokia that demands jumping off a burning platform.

Today Elop finds Nokia fallen to third in smartphones, declining sales 27% when the industry grew 60% and Nokia's biggest rival towers at twice the size of Nokia. Nokia's smartphone unit generates under a quarter of Nokia's revenues and generates a 4 Billion dollar loss to the corporation. Nokia has reversed the migration from dumbhpones to smartphones, now Nokia customers are abandoning the Nokia brand when they go from dumbphones to smartphones. Nokia's ecosystem is devastated and bleeding and many parts of it are sold. The whole Nokia corporation is generating a loss and the loss is powered by ..that smartphone unit that the burning platforms memo mostly focused upon. The Nokia share price has lost 55% of its value in the past 12 months of Elop's leadership. And Samsung has passed Nokia selling twice as many smartphones as Nokia, and is poised to pass Nokia for global leadership in all mobile phones this year - doing that profitably - and Elop sleeps soundly not worrying about Samsung. This is apparently no longer a time to worry about Burning Platforms. Now Nokia is safe in the alternate universe that is Stephen Elop's mind. Please Nokia Board - Fire this lunatic now!

ABOUT COMMENTS

I welcome comments on this blog. Please note, I have a rule, your comment must reflect the fact, that you read the actual blog article. I know its a long article, but do not post comments if you didn't read it all. If anyone says 'Tomi is delusional because he wants to go back to Symbian' - I never said that, and your comment will be deleted without mercy. Same is true if you claim Tomi thinks Nokia was fine before Elop, or if you suggest I didnt' see there were good points in the memo. You have to read the full blog here, if my response to you would include the line 'if you had read the blog article' - such comments will simply be deleted, regardless of what other valuable points you may have made in your comment. Be warned.

And obviously, in this case, I will limit all discussion to the memo. You must talk about the memo, its effects and facts. We will not debate once again details about Android or Windows Phone or the iPhone. There are plenty of blog articles here about those matters. This discussoin will be limited to the Burning Platforms memo, and its effects to Nokia. But I do welcome your thoughts. Was this the most damaging memo ever written?

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Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Hong Kong but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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